Brexit: Belfast Agreement
 - Question

Lord Rana: To ask Her Majesty’s Government what is their assessment of the impact of Brexit on the future of the Belfast Agreement.

Lord Dholakia: My Lords, on behalf of the noble Lord, Lord Rana, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.

Viscount Younger of Leckie: My Lords, the future of the Belfast agreement is not, and never has been, in question. The UK’s exit from the EU does not change the commitment of the UK Government and the people of Northern Ireland to the Belfast agreement, its successors and the institutions that they establish. The Government will make a success of the UK’s exit from the EU and continue to build a brighter, more secure future for Northern Ireland.

Lord Dholakia: My Lords, the Minister is aware that Northern Ireland has a border with another EU country. Under the Belfast agreement, most people living in Northern Ireland are entitled to dual citizenship. Many people already carry Irish passports and, since the referendum, many more—including unionists—have applied for Irish passports to protect their status as EU citizens. Can the Minister explain how the Government will work to secure the retention of EU citizens’ rights, including the free movement of goods and people across the Irish border? Does he agree with me that this is a unique situation affecting 1.8 million people and can he explain how Brexit affects them?

Viscount Younger of Leckie: The noble Lord quite rightly points out the important rights afforded to the people of Northern Ireland under the Belfast agreement. Let me reaffirm that there is nothing in the outcome of the referendum that undermines the Government’s rock-solid commitment to that agreement and its successors. The Government recognise the very real benefits of the common travel area; the open border for people and businesses has served us well. The Secretary of State for Northern Ireland has been very clear that it is an absolute priority for him that we,
“do not … see a return to the borders of the past”.—[Official Report, Commons, 20/7/16; col. 815.]

Lord Reid of Cardowan: Will the Minister confirm that the Belfast agreement is not just an internal agreement between the parties in Northern Ireland but an international treaty between two sovereign states of the United Kingdom and the Republic of Ireland? As such, can he tell us whether it is lodged with the European Union and, if so, what implications would the withdrawal of one of the parties from the European Union have on the status of that international treaty?

Viscount Younger of Leckie: It is true what the noble Lord says: it is an interrelated agreement—it is power sharing for Northern Ireland and it is quite a complicated agreement, but there is no reason to suggest that the outcome of the referendum means that the agreement needs to be revisited. Perhaps I can reassure the noble Lord on that. The UK Government, Irish Government and Northern Ireland political parties are fully committed to upholding the agreement and its successors.

Lord Howell of Guildford: My Lords, is my noble friend aware that the Republic of Ireland has shown some interest recently in associate membership of the Commonwealth? Do Her Majesty’s Government consider that this could be useful in resolving some of the border problems which are being discussed? If so, will the Government consider pressing the Commonwealth authorities to develop the relationship with the Republic of Ireland which is already blossoming quite strongly?

Viscount Younger of Leckie: This is a helpful comment from my noble friend. I know that the new Secretary of State for Northern Ireland has hit the ground running, if I may put it that way. He has been meeting a variety of parties to ensure that he gets into his new role. I will pass that message on.

Lord Rogan: My Lords, several Ministers have repeatedly stated that our land frontier with the European Union will not be a hard border. What discussions have the Government had with the Government of the Republic of Ireland to determine the exact nature of this, our only land border?

Viscount Younger of Leckie: It is clearly a priority and I can reassure the noble Lord that discussions are already taking place. There is—and always has been—a strong will to preserve the common travel area and to ensure that we do not have a hard border. This is what the Government are working towards.

Lord Hain: My Lords, is not the problem that this is the first time in history that Northern Ireland and the Republic will be on opposite sides of a European border? They joined together in 1973; although the common travel area has been in existence since the early 1920s, there were tough security controls and border checks during the Troubles. Is it not unthinkable that, in an era of mass refugee migration and jihadi terrorism, the only land border between the UK and the EU would be completely open?

Viscount Younger of Leckie: The point is well made by the noble Lord, who has much experience in this particular area. I want to reassure him that this is very much at the top of the agenda. On the one hand, we want to have a soft, not a hard border. At the same time, all parties are well aware of the security issues and of people passing to and fro.

Lord Shutt of Greetland: My Lords, the Belfast agreement gives encouragement to the use of European Union resources in Northern Ireland—and across the island of Ireland as a whole. Presently, £3.5 billion is scheduled to be spent between 2014 and 2020 for peace, INTERREG, rural development and agricultural support. What comfort can the Minister give that these resources, planned to be available for the entire period of the 2014-2020 programmes, can be honoured?

Viscount Younger of Leckie: The first thing to say to reassure the noble Lord is that the UK will continue to have all the rights, obligations and benefits that membership brings—including receiving European funding—up to the point at which we leave the EU. We recognise that many organisations across the UK which are in receipt of EU funding, or expect to start receiving it, want reassurance about this. The Chancellor of the Exchequer has confirmed that structural investment funds projects, signed before the Autumn Statement, and the Horizon research funding that has been granted, will be guaranteed.

Lord Kilclooney: My Lords, as someone involved in the negotiations of the Belfast agreement, can I ask the Minister whether the Council of Europe Convention for the Protection of Human Rights is a requirement in the Belfast agreement? Secondly, since there are now more people from Poland than from the Republic of Ireland living in Northern Ireland, will both those with Irish passports and those with Polish passports be guaranteed their future in Northern Ireland after Brexit?

Viscount Younger of Leckie: I can only repeat what I said in my first Answer which is that the Belfast agreement remains intact and we do not envisage any changes.

Employment: Remuneration
 - Question

Bishop of St Albans: To ask Her Majesty’s Government how they intend to address the gap between the remuneration of senior executives and their employees.

Baroness Neville-Rolfe: We intend to publish a consultation document later this year which will set out a range of options for improving corporate governance, including measures  to strengthen the way executive pay is set and reported. This follows on, and is in line with, the Prime Minister’s statements on this important subject.

Bishop of St Albans: I thank the Minister for her reply. I wonder whether she has read the report published last week by the High Pay Centre written by Chris Philp, the Conservative Member for Croydon South, which makes a number of recommendations, including requiring firms to create a shareholder committee with the power to ratify pay packages comprised of shareholders with longer-term holdings in the company. Will these proposals be part of the consultation that will be published?

Baroness Neville-Rolfe: I have not yet read the report, although I know that it was discussed in the House and I think it makes a very useful contribution. As I see it, that idea is in the mix of what we will consult on. The underlying objective is to make shareholders exercise much better oversight over company decision-making. The changes that we will be looking at, and indeed prior reforms, have been directed at this objective—some with more success than others.

Lord Forsyth of Drumlean: My Lords, does my noble friend know that many of the big institutions contract out their voting to other organisations at company AGMs? Is not the key to ensuring that remuneration is brought under proper control that those institutional shareholders exercise their rights and that the Government change the rules so that votes on executive pay at shareholder meetings are binding on boards?

Baroness Neville-Rolfe: My noble friend makes a very good point about voting. I am glad to say that one of the options we will be looking at is binding votes, for the reasons that he says.

Baroness Burt of Solihull: My Lords, it seems to me that the problem is that companies benchmark their executive pay against other companies in the marketplace. Does the Minister agree that a more diverse range of company models in the marketplace, such as mutuals where workers are also shareholders, would bring a greater sense of proportion to executive pay and have a stabilising effect on pay in the marketplace generally?

Baroness Neville-Rolfe: The noble Baroness is right that there is a place for comparisons, although, as somebody who sat on a number of boards, I actually think that one needs to look at the overall position and in relation to the wider workforce. That is something that we will certainly look at as part of the consultation that we will publish, because some of this stuff is complicated and we need to make sure that we talk to people on the detail.

Lord Hodgson of Astley Abbotts: My Lords, my noble friend referred to the importance of increasing shareholder power. Is she aware that individual shareholders in particular are increasingly under pressure  to hold their shares through nominees? The nominee holder is not required to send on information to the individual shareholder about the company in which he or she has a holding. They are therefore disenfranchised. Would it not be a good idea to make a simple legal change which would require nominee companies to enfranchise and inform the people who actually hold the shares?

Baroness Neville-Rolfe: My noble friend, as always, brings unusual insights to the debate. It sounds as though this is a point that he and I should discuss further, because clearly we want to make sure that shareholders are exercising the oversight that we all want.

Lord Stevenson of Balmacara: My Lords, there is an irony in this Question being answered today, in that later today we will consider a statutory instrument which makes a welcome increase to the national minimum wage by the order of 25p per hour. An earlier report by the High Pay Centre, which is a cross-party initiative, reported that FTSE 100 CEOs had just enjoyed a 10% pay increase to over £5.1 million per annum on average in the last year. Can I press the Minister a little further on what will be in the consultation? She mentioned a number of things, but the Prime Minister’s comments, to which I think the noble Baroness referred, are that she would like to see not just consumers represented on company boards but employees as well, and she wants to see more transparency on pay, including making shareholder votes on corporate pay not just advisory but binding. Will the noble Baroness confirm that?

Baroness Neville-Rolfe: We are looking at the precise wording of the consultation document, but the idea is to explore the various ideas that the Prime Minister set out so eloquently in this area. That would include binding votes, employee representation, which I am aware of because I used to sit on a German board—it has pluses and minuses—and, of course, full disclosure of bonus arrangements.

Lord Tebbit: Does my noble friend agree that it might help to bring a different dimension to these discussions if, occasionally, we referred not to the “shareholders” but to the “owners” of businesses and not to the “executives” but to the “hirelings” who operate on behalf of the owners?

Baroness Neville-Rolfe: I thank my noble friend for his interesting and provocative remark.

Earl of Erroll: Is there not also a deeper problem, which is that many of these remuneration packages of senior executives are geared towards profit targets in various ways? The quickest and easiest way of doing this is to axe the visionary research and development programmes in order to increase the bottom line temporarily to get their rewards. As a result, some of our larger companies are suffering from, I would say, a lack of vision, expansion and innovation.

Baroness Neville-Rolfe: The noble Earl knows that I share his passion for innovation and R&D. I believe we need a governance framework that ensures a good sense of strategy and long-term planning, and that helps to encourage innovation and R&D.

Lord Haskel: Some companies publish a ratio between the top salaries and the bottom salaries. As part of the Government’s consultation, are they going to seek some kind of standard—some kind of ideal ratio—for this sort of thing?

Baroness Neville-Rolfe: As the noble Lord will know, the devil is in the detail in these matters. Certainly however, requiring the publication of the ratio between the CEO’s pay and the relevant average is something we will be looking at. That is coming in in the United States in 2017, as he will know. We need to learn from that experience and, as I have said, try through our consultation to come to the right changes in this important area.

Zimbabwe
 - Question

Lord Oates: To ask Her Majesty’s Government what guidance they provide to United Kingdom financial institutions regarding the provision of bailout funds to the government of Zimbabwe.

Baroness Goldie: My Lords, there is no bailout for the Zimbabwean Government and no British taxpayer money is used to fund that Government. The Government of Zimbabwe are in discussion with private sector banks to arrange a financial package to clear their debt arrears to the international financial institutions. We do not provide specific guidance about the provision of funds to Zimbabwe, but if asked, we would discuss the situation, highlighting the financial and political risks of operating in Zimbabwe.

Lord Oates: I am grateful to the Minister for her Answer. She will be aware of the deep disquiet among people in Zimbabwe at the news that the British embassy in Harare had facilitated a meeting this year between the noble Lord, Lord Mandelson, chairman of Lazard International, and Finance Minister Patrick Chinamasa. I am sure the Minister will recognise that the provision of any bailout funds to the ZANU-PF regime in Zimbabwe will only prolong the misery and suffering of the Zimbabwean people. It will inevitably be used to fund the salaries of the Zimbabwean armed forces and the Zimbabwe Republic Police force—salaries which are overdue at present. These are the very organs of state that are currently in violation of the constitution of Zimbabwe, in defiance of the orders of the High Court of Zimbabwe and committing gross human rights abuses against the people of Zimbabwe. Will the Minister therefore give an unambiguous statement to this House, and more importantly to the ZANU-PF regime, that we as a people and a Government will  oppose any further funds to the Zimbabwean Government until they have demonstrated a sustained adherence to the constitution of Zimbabwe and an end to the gross human rights abuses of the people of Zimbabwe?

Baroness Goldie: I thank the noble Lord for his extensive observation. He makes an important point. There are justifiable concerns about human rights, governance and the political system in Zimbabwe. I reassure him that the British Government persistently and resolutely make representations to the Zimbabwean Government about our concerns, asking that the rule of law be observed and that democratic rights be respected. I should point out to the noble Lord that we have an ambassadorial presence in Harare, and that is very important. It is a necessary diplomatic conduit for the work that the British Government do—not in funding the Zimbabwean Government but, for example, in providing invaluable help for infrastructure projects by working with implementing partners and NGOs. However, at the end of the day, what other financial institutions choose to do with a foreign Government is not really under the control of the British Government.

Lord Collins of Highbury: My Lords, one thing that is clear is that the human rights situation in Zimbabwe is getting worse. There is a lot that the United Kingdom Government can do, particularly in terms of sanctions against individuals, which they currently impose on the President of Zimbabwe. Can the noble Baroness explain why the Finance Minister, Mr Chinamasa, has had that embargo removed? Why are we not exerting more leverage and using the authority that we have now to restore human rights?

Baroness Goldie: The noble Lord makes an important point about human rights. We consider the human rights situation to be stable but fragile, and, as I indicated to the noble Lord, Lord Oates, we will continue to raise concerns about individual cases. We monitor the situation closely and are able to do so because of our embassy in Harare. We regularly call, both bilaterally and in partnership with EU member states, for an end to all abuses and for the restoration of internationally accepted human rights standards. In relation to sanctions, I reassure the noble Lord that there is an arms embargo against Zimbabwe and active sanctions against President Mugabe and his wife, Grace. That extends to travel bans and all financial dealings, and their assets in the EU are frozen.

Lord St John of Bletso: My Lords, with the rapidly deteriorating macroeconomic situation in Zimbabwe and the growing social unrest, what can Her Majesty’s Government do to support much-needed reforms? More specifically, to what degree are the Government of Zimbabwe genuine in their re-engagement with the West? Does the Minister agree that any financial support to Zimbabwe should be tied to radical reforms in the country?

Baroness Goldie: On the general front, in relation to Zimbabwe’s indebtedness to the World Bank, the UK is party to that organisation and we have made it clear  that the indebtedness must be cleared. However, that will not of itself trigger a resumption of relations. We have made it clear that there has to be progress on the very type of reforms to which I alluded earlier. We are endeavouring to support the people of Zimbabwe, who are vulnerable and in a fragile condition. I referred earlier to some of the support that the British Government have been able to provide. We have been able to provide food security for over 1 million people; we have been able to help hundreds of thousands of children to attend primary school; we have been able to assist with clean water and sanitation projects; and we have been helping to reduce the maternal mortality ratio. Those are all moves that we achieve and on which we make progress not by dealing directly with the Zimbabwean Government but by using our implementing partners and other agencies to deliver help to the very people who need support but currently do not get it from their own Government.

Lord Howell of Guildford: My Lords, when the time comes, but not before that time, will the Government encourage the Commonwealth authorities and the Commonwealth Secretariat to consider welcoming Zimbabwe back into the Commonwealth family of nations?

Baroness Goldie: My noble friend’s aspiration is positive. Ultimately, there would be a desire to do that but the Zimbabwean Government would have to achieve a very great deal before we were able to enter into a more formal relationship. There is an overdue need for serious fundamental reform. We have to have evidence that the Government in Zimbabwe are themselves serious about addressing these reforms, and we need to see visible and tangible evidence of that before any further relationship can be contemplated.

Baroness Falkner of Margravine: My Lords, perhaps I may draw the noble Baroness’s attention to the original point of this Question. I myself have benefited from facilitation by our embassies and missions abroad, as many other Members of the House of Lords may have done. However, does she not accept that there was a slight error of judgment on the part of our high commissioner in Zimbabwe in facilitating a well-known lobbying group to carry out business on behalf of a financial institution with a Government who are legendary only for their human rights abuses and deep financial corruption?

Baroness Goldie: If the noble Baroness is alluding to the reference by the noble Lord, Lord Oates, to the visit by the noble Lord, Lord Mandelson, I should make it clear that the noble Lord visited Zimbabwe in a personal capacity in February of this year. He had been in a private engagement in South Africa. He simply asked the British Government if he could be helpful in promoting their objectives in Zimbabwe and, given his experience, our Government said that he could reinforce the case for reform, which I think is what we all want to see. To that end, the British embassy in Harare facilitated the meeting, which was attended by the British ambassador. It was constructive  and focused on the need for economic and rule-of-law forms. That is precisely the kind of dialogue that is essential if we are to see any progress made.

Brexit: Constitutional Reform and Governance Act 2010
 - Question

Lord Wallace of Saltaire: To ask Her Majesty’s Government at what stage or stages of the European Union exit negotiations the requirements of Part 2 of the Constitutional Reform and Governance Act 2010 will be fulfilled.

Lord Bridges of Headley: My Lords, the precise timing, terms and means by which we leave the European Union will be determined by the negotiations that follow the triggering of Article 50. We will observe in full all relevant legal and constitutional obligations that apply.

Lord Wallace of Saltaire: My Lords, as the Minister recognised, we are now in some confusion over sovereignty—Bernard Jenkin and others suggest that we can abrogate the limits on external sovereignty and ignore international law. The Minister is too young to remember Margaret Thatcher’s remarks against moving from parliamentary to popular sovereignty, but we are clearly moving away a little. The Government have suggested that we can move towards exerting Article 50 by prerogative sovereignty. Executive sovereignty and popular sovereignty take us a long way away from parliamentary sovereignty, which the Constitutional Reform and Governance Act was intended to strengthen. Can we have a reassurance from the Government that the rules of that Act will be followed very closely as the Government move towards treaty renegotiation?

Lord Bridges of Headley: I think I got that question, and I thank the noble Lord for it. The Government are very clear about the obligations of the Constitutional Reform and Governance Act 2010, which states clearly that both Houses of Parliament have a role in approving treaties as set out in the Act. As I said in my first statement, we will observe in full all relevant legal and constitutional obligations that apply.

Baroness Hayter of Kentish Town: My Lords, leaving the EU is not a simple step outside but a journey. The Government need to set objectives for their negotiations to get the best deal for what comes after we leave. They need a clear map of the hurdles, the challenges and indeed the opportunities, as well as the ways of handling emerging issues. It is vital that Parliament and, through us, the public are engaged with this every step of the way as to how we leave the EU and our relationships afterwards. Will the Government commit to ensuring that level of engagement throughout the process, so that any final vote that may happen would be on the basis of a developing consensus?

Lord Bridges of Headley: I welcome the noble Baroness to her position. I look forward very much to the conversations that we are bound to have over the weeks and months ahead. I repeat what my right honourable friend the Secretary of State said and I repeated in this House on Monday, that,
“we are determined to build a national consensus”.—[Official Report, Commons, 5/9/16; cols. 879.]
In doing that, we need to involve this House and the other place and to have as much scrutiny and consultation as possible. I also thank the European Union Committee for its excellent report Scrutinising Brexit: The Role of Parliament, which came out in July. In paragraph 21, it said:
“It is clear, therefore, that parliamentary scrutiny of the negotiations will have to strike a balance between, on the one hand, the desire for transparency, and on the other, the need to avoid undermining the UK’s negotiating position. We note that parliamentary scrutiny has shown itself, in practice, to be highly flexible”.
I am sure that noble Lords may have mechanisms for how we might achieve that in such a way as to address the points that the noble Baroness made.

Lord Forsyth of Drumlean: My Lords, there is nothing more irritating on a journey than having people in the back seat saying, “Are we nearly there yet?”. I welcome the positive statement by the noble Baroness, but if we are to embark on a journey, would it also be helpful to not have people constantly trying to make us do a U-turn?

Lord Bridges of Headley: The noble Lord is right. I am reminded about this tendency by my seven year-old twins every time we get in the car. I repeat that I totally understand and sympathise with what the noble Baroness is saying about the need to provide the appropriate level of scrutiny. However, as my right honourable friend the Prime Minister said in the other place yesterday, we cannot provide a running commentary. It is very important that we strike a balance between informing, engaging and consulting while also protecting the national interest.

Lord Myners: My Lords—

Lord Foulkes of Cumnock: My Lords—

Cross Bench!

Lord Foulkes of Cumnock: He used to be one of us.

Lord Myners: The noble Lord is renowned for his courtesy and therefore I could anticipate his response.
Does the Minister believe that it is possible for us to leave the European Union without a parliamentary vote?

Lord Bridges of Headley: My Lords, as I said, we are determined to follow the constitutional obligations that apply. As my right honourable friend the Secretary of State said on Monday, the aspects of the European Communities Act 1972 that are required to be repealed and the aspects of the acquis communautaire that need to be carried into British law are important joint issues that have to be decided. Once we have got to the  point of deciding what we need to do in that regard, we will come back to the House at the first possible opportunity.

Lord Foulkes of Cumnock: My Lords, further to the question of the noble Lord, Lord Forsyth, does the Minister agree that if one is going on a journey it is important to know the destination? Will he pluck up his courage and say to the Prime Minister that her accountability to Parliament should not be described as a running commentary?

Lord Bridges of Headley: That is not how my right honourable friend’s comment should be perceived. Brexit means leaving the European Union, as we said on Monday.

Business of the House
 - Motion on Standing Orders

Moved by Baroness Evans of Bowes Park
That Standing Order 46 (No two stages of a Bill to be taken on one day) be dispensed with on Tuesday 13 September to enable the Finance Bill to be taken through its remaining stages that day.
Motion agreed.

Business of the House
 - Timing of Debates

Moved by Baroness Evans of Bowes Park
That the debate on the motion in the name of Baroness Hayter of Kentish Town set down for today shall be limited to 3 hours and that in the name of Viscount Hanworth to 2 hours.
Motion agreed.

Civil Society and Lobbying
 - Motion to Take Note

Moved by Baroness Hayter of Kentish Town
That this House takes note of the role that charities, trade unions and civil society groupings play in a democracy, including the provision of advice and information to government, and of the case for regulating lobbying activities, including those undertaken by business and private interests.

Baroness Hayter of Kentish Town: My Lords, I notice that after this debate there will be a “Statement on grammer schools”—spelt with an “er”. Oh, it has been changed to an “ar”—congratulations. I wondered whether it referred to “crammer” schools.
I am delighted to open this debate, during which I predict we will hear amazing stories of the brilliant work done by charities, large and small, local and national, which form part of the rich tapestry of civic life. Britain is well known for the Olympics, the Paralympics, warm beer, cricket, football, weather and the Royal Family, but also for our charities and a major political party having been created by voluntary organisations—that is, the trade unions—which represented manual workers at a time when they had no voice in Parliament. Indeed, well before the unions established the Labour Party, they were lobbying on behalf of their members, their families and their communities.
Likewise, charities have transformed society, often driven by extraordinary individuals such as Lord Rix, whose death we recorded so sadly on Monday, who not only ensured that support was available to families but also campaigned on their behalf. He was a shining example of where not only the individual’s own experience but organisations representing such groups give voice to their beneficiaries.
However, despite the role that charities played in providing education, health, pensions and insurance—before the state took responsibility—and despite the testimony of your Lordships about the current work of charities, the Government have sought to clip the wings of charities, and of government-funded independent organisations such as universities, by restricting their ability to share their expertise with decision-makers, be that Government or Parliament. They similarly set out to curtail trade unions by undermining their funding.
What is extraordinary is that, even as they sought to hamper charities’ efforts on behalf of clients, the Government did nothing to increase transparency or lobbying by big business. Neither commercial interests nor the media are constrained in their attempts to influence government, while charities experience a “chilling” effect on their duty to speak on behalf of beneficiaries, as I am sure we will shortly hear from the noble and right reverend Lord, Lord Harries.
I am not against legitimate lobbying by industry. Businesses need to thrive and they are helped in that by having understanding legislative, trade and financial frameworks. However, that lobbying should be open, transparent and regulated, particularly where it may be about international interests gaining secret access to government. However, despite David Cameron’s warning that lobbying was the next scandal waiting to happen, his Government’s so-called register of lobbyists actually omits lobbying by in-house public affairs departments and it ignores lobbying of senior civil servants, Peers, MPs and even chairs of Select Committees completely. We will return to this tomorrow when we debate the lobbying Bill of my noble friend Lord Brooke of Alverthorpe.
The issue today is how to promote, encourage and enhance the ability of those without access to power, influence or big money to get their voice heard in our democracy. The Government do not seem to share that objective. Their lobbying and transparency Act left the private sector well alone, even as it tied up charities in red tape and served to chill their work. This was quite unnecessary, given that the combined  third sector campaign spend in 2015, at below £2 million, was under 5% of the parties’ spend and probably less than the cost of recording and regulating it.
We will also hear shortly from the noble lord, Lord Hodgson of Astley Abbotts, whose own review of that Act concluded it did not have the right balance with regard to charities’ activities and had produced a “chilling effect” on these. As if the Act had not clipped charities’ wings enough, the Charity Commission then warned them off from becoming involved in the EU referendum. Even that was capped when the Cabinet Office proposed that any independent organisation in receipt of public money should not use it to inform or advise Government or, indeed, even the European Union. No academic would be able to give evidence to a Select Committee. No safety charity would be able to work for better EU regulations. No adoption and fostering charity would be able to advise the Government on better legislation or policy to achieve the Government’s own aim of speeding up such processes.
As the animal welfare charities wrote to us,
“We are closest to the issues. Every day, we see the impact of a lack of education and of the mistreatment of animals. It is essential for the quality of public policy that, as the experts in our field, we can shine a spotlight on emerging issues that have not yet been picked up by policy makers. Evidence based on the frontline experience of charities such as ours is an absolutely indispensable part of effective policy development”.
Historic England, the National Trust, Coram, which helps vulnerable children, Save the Children, which works in conflict zones, and charities demining in former war zones or preventing HIV/AIDS all have expert advice to proffer but are threatened with silence by the Government. Sensibly, that particular nonsense has been set aside, but it is against a background of pressure on any charity with public funding to hold its tongue, even when it seeks to further its objective and help beneficiaries.
Civil Exchange, in its review of the voluntary sector in 2016, felt forced to title its report Independence in Question after detailing numerous attacks on the ability of independent organisations to speak out on behalf of beneficiaries—not only the no-advocacy clauses in grant agreements but a flagrant disregard of the compact agreement signed with the voluntary sector, which promised to respect and uphold the independence of civil society organisations to deliver their missions, including their right to campaign regardless of any financial relationship. When the Refugee Council faced a no-advocacy clause in contracts, its CEO protested that it was,
“axiomatic … that any independent service provider should be free to speak out, without fear or favour”.
The head of Nia, a charity working to counter violence against women, said:
“Increasingly, state funding is driving us into a narrow service delivery role … required to act as an arm of the state rather than as an independent NGO”.
Indeed, some charities fear that mission is following money, rather than the other way round, while the Government dictated that housing associations sell off some of their properties, regardless of the long-term needs and underlying missions of those charities.
The value of trade unions from the 19th century was not just in representing workers vis-à-vis employers but in speaking up for workers and their families  within the political sphere, leading to the factory Acts, the ending of child labour, free school meals, compulsory education, old-age pensions and unadulterated food and drink. So it is with charities. They do not simply relieve poverty, important though that is; they seek to prevent it and to give voice to the voiceless—be those children here or abroad, in war zones or in famine areas—drawing on their experience to relieve the causes of poverty or distress.
My noble friend Lord Judd, who is recovering from surgery so cannot be with us today, has run or been involved in a host of charities. That led him to become totally convinced of the role that civil society can, and indeed must, play in a healthy democracy. That was demonstrated to him particularly during the bitter conflicts of Chechnya and the north Caucasus, when he saw the Russians harassing and curbing the activities of NGOs. There is, says my noble friend, an overwhelming responsibility for NGOs to be able to speak out with the “authority of engagement”. I could not put it better.
We need the voice of charities and of their knowledge but also the voice of their beneficiaries. I hope the Government will take this need seriously. I beg to move.

Lord Patten: My Lords, I am right behind what the noble Baroness said about the importance of charities and I am right behind them—but no charity is beyond scrutiny. During 2016 so far there has been a growing chorus of concern about the lobbying activities and associated behaviour of one charity set up by statute, the National Trust, and particularly the activities and behaviour of those in the regions away from London, with some terrible publicity recently for a once universally revered outfit.
I am not clambering aboard any bandwagons here, for in a short debate I sponsored in your Lordships’ House back on 12 November 2001 on the need to modernise the National Trust’s governing legislation, many issues were raised concerning inadequate corporate governance, lack of transparency, lack of regional representation in particular, and lack of regulation of its activities. All that was missing then, from today’s cocktail of concerns, was growing concern about lobbying by the National Trust.
The distinguished social theorist, the Anglican canon and the London solicitor who set up the National Trust in late Victorian England—and our predecessors in this and another place who passed the statute in Edwardian England—could not have foreseen what a landed leviathan the National Trust would become. The National Trust, indeed, has accumulated holdings that no Whig magnate in our House in the 18th century could ever have dreamed of accumulating. It has more than 600,000 acres of land, close to 600 miles of coastline and about 250 monuments and buildings. Yet the National Trust is totally unregulated, except by itself. Some people say that it is out of touch and increasingly remote. That, perhaps, is simply a function of the scale and size of the National Trust.
I believe that the present scale and organisation of the National Trust is inconsistent with the Government’s modernising agenda, which I strongly support, because  devolution and accountability are increasingly part not just of regional rhetoric but of regional reality. Yet in 2016 the National Trust has set off on a totally new course with its additional lobbying activity, producing a new and positive blizzard of lobbying and a maelstrom of demands and advice, in relation to—just listen to the litany—global climate change policy, fracking, wind farms, and then, as if it was Defra, proposing a six-point national agricultural policy for post-Brexit rural times, with farmers, of course, to be denied subsidy or support unless they pursue particular environmental agendas. These environmental agendas may not be wrong but the suggestion is certainly extraordinary.
At the same time, and in lock-step with a change of focus into becoming this new lobbying organisation, the National Trust seems to have developed a new line in what can only be called autocratic and out-of-touch behaviour, whether towards farmers or cricketers. We just heard about cricketers and warm beer from the noble Baroness on the Front Bench. Just listen to what we have seen in the last four weeks. As far as farmers are concerned, there was the gazumping of local farmers in the Lake District, who were all at an auction to bid for a very delicate, upland hill farm area where they have long been active as the last, rather fragile link with our traditional farming heritage, and very welcome low-cost custodians of our man-made landscapes. Up pops some agent of the National Trust, bidding hundreds of thousands of pounds more than any chartered surveyor would suggest the land was worth as farmland, with all the casual insouciance of someone waving the cheque-book of a land-accumulating Ukrainian oligarch.
Let us turn to cricket and football and the National Trust’s attitude to these activities. Just yesterday, as reported in the Times—and therefore it must be true—the National Trust is evicting the local football and cricket teams from pitches in the park of Shugborough Hall in Staffordshire. They have been there for decades—almost time out of mind: father to son, and, I dare say, mother to daughter—playing football and cricket and occupying just 1% of the 900 acres of the Shugborough estate. This was because, as a National Trust representative was quoted in the Times as saying:
“Football and cricket really are non-traditional activities”.
You could not make it up. Generations ago the aristocrats used to encourage people to play cricket and football there. I suppose that was noblesse oblige, which is not always to be sneered at—whereas the new autocrats of the National Trust want to turf them out. Again, you could not make it up.
The trust needs to be better regulated. It was set up by statute for the benefit of the whole nation and its citizens, not just for the executive and paid-up members of the National Trust. There needs to be someone to whom complaints can be made, whether by an aggrieved tenant farmer or a member of the general public such as me or anybody else who just happens not to be a member of the trust. After that there is an urgent need for a full review, best set up by the National Trust itself, into its own governance since 1907. It has grown and grown in a way that is not its fault or that it could ever have predicted. I urge it to do this. The noble Lord, Lord Bragg—I apologise for not having suggested this to him in advance—would make a splendid independent  chairman of such an independent commission into the National Trust. It would look at the trust to make quite sure that indeed acts in the national interest, cleaving to its statutory and charitable origins.

Baroness Jowell: My Lords, I congratulate my noble friend Lady Hayter on bringing forward this debate. I begin my brief contribution by underlining the importance of her tribute to Lord Rix who, in his work as chairman of Mencap, inspired by his own daughter’s learning difficulties, is perhaps a shining example of the constructive and enduring purpose of charities. Had Mencap under his leadership not shone a bright light on the circumstances of children with learning difficulties, who were often living with abuse and neglect in long-term institutions for people who were then described as having mental handicaps, we would not have seen the accelerated rate of change that we now take for granted. Nobody now talks about the best care being provided in large institutions, either for people with long-term disability or people suffering the effects of long-term mental illness. That is one example of the extraordinary power of charity, independent of government and with a loud voice to bring about change for the better.
The importance of this debate is that the constituents of civil society, which my noble friend so clearly described, are the fabric of the society in which we live. This central question has been unsatisfactorily answered by the lobbying Act, and to some extent by the now-forgotten initiative of the big society. The balance is wrong between respect and self-confidence in government and the extraordinary contribution that charities can make. Perhaps I should have said at the beginning that I have declared interests in many charities with which I have an association. I was for many years assistant director of Mind; I will come back to that in a moment.
How do we get that balance right between civil society and the publicly accountable responsibility of government? Nobody has put it better than a Gamesmaker who I talked to four years ago during our Olympic Games. She was travelling every day for two hours to get to the Olympic park and two hours home in the small hours of the morning, only to come back again the next day. It was a truly punishing schedule and I asked her why she was doing it. She said, “Because it makes me feel I matter. I have a place here, and I have a contribution to make. To be part of this is something I will remember for the rest of my life”. She said, “I really want people like you to understand that it is important to know how much more people are willing to give if they are not doing so only because government tells them that they should”.
In a way, that was the crudeness of the big society initiative, whose failure can be explained through the clumsiness of that intervention. People, charities and local community organisations felt that somehow the Government were on their back. Suddenly, the supportive relationship between local authorities and local community organisations had been weakened because charities cannot replace the proper responsibilities of an elected Government. That is why it is right to  have misgivings about voluntary organisations running custodial institutions and taking on the proper responsibilities of the state.
This takes us to the relationship between civil society and the state at a time when the state is shrinking—the critical recognition of a self-confident Government. I have been on the receiving end of disobliging lobbying as a Minister, and it is at times a nuisance. You wish they would get off your back, but you have to remember that in the end you are going to produce better results. The critical balance is to allow charities the freedom to give voice to what they learn through experience and to do things in ways that are different from the way in which fully publicly funded and provided services are delivered.
In his great book The Gift Relationship Richard Titmuss reminded us about the way we as a society are bound by reliance on blood donation. It is time to modernise the nature of the gift relationship. The new gift relationship is the gift of time, but the gift of time is properly delivered and valued where the relationship between government and voluntary and community organisations is properly worked out in a respectful way that celebrates innovation, is prepared to recognise the risks that many charities face, does not burden them with crushing bureaucracy and enables their independence and freedom.
Finally, last night I was talking to some young men from my former constituency who run the Brixton soup kitchen. It is a wonderful local organisation run essentially on their largely unpaid efforts. I asked what they would say if they were making a speech about this today. One of the young men said, “I think that people like you ought to talk more in ways that people like us understand”. There is still a yawning gap, but the pluralism in our society is the essence of what defines our shared humanity.

Baroness Scott of Needham Market: My Lords, the noble Baroness, Lady Hayter, has done the House a great service by tabling this debate. I shall confine my remarks to the charity sector and place on record how much I am looking forward to the work of the Select Committee which has been established to look at a range of issues affecting the sector. I declare an interest as a trustee of the Industry and Parliament Trust and as a member of the NCVO advisory council.
Over the last 20 years or so, every set of institutions in this country has come under serious question: the police after Stephen Lawrence and Hillsborough, the Government and intelligence services after Iraq; press abuses through Leveson; and Parliament itself after cash for questions and the expenses scandals.
For charities, more recent concerns about fundraising methods and the questionable governance highlighted by Kids Company and others might not be in the same league, but they have clearly had an impact on public trust. The most recent figures from the Charity Commission show a fall, from 6.7 out of 10 people in 2014 to 5.7 this year. For organisations dependent on public good will for their prosperity and survival, this is worrying.
The debate throughout all this is about whether trust and confidence can be rebuilt through creating new legal and regulatory frameworks or whether it is through the actions of the organisations themselves, especially in changing cultures where bad practices have crept in. Of course, the fact is that you have to have both. My view is that self-regulation should be the preferred option, but always with a robust and powerful regulatory regime as a backstop—the last resort rather than the first. I worry that a Government sometimes make problems look far more widespread and serious than they actually are by proposing draconian regulatory measures. A macho style of government has become all too common.
It is almost certainly a forlorn hope, but in this, as in other areas, sometimes it is best to make haste slowly, not in a spirit of pushing reform into the long grass but because hasty, ill-informed change simply stacks up problems for the future which then require further intervention to put right. All Governments have a tendency to overlegislate, but using new laws as a substitute for good management, high-quality dialogue and thoughtful policy-making simply causes trouble.
In the 25 years since I became involved in local government, I have increasingly seen in the public sector organisations and individuals who are fearful of doing anything new or innovative and who spend increasing amounts of time and money on process and measurement rather than actions. It is not surprising that they have become risk averse because, unlike in the private sector, in the public sector the incentives are all for caution.
I would hate the Government to push the charity sector down that same route. Its very strength is its independence, flexibility and ability to innovate. The public are very clear about what they want. The same report from the Charity Commission tells us that two-thirds of the public say that charities are spending too much on administration. The irony is that measures to improve trust could actually make it worse if the administrative and regulatory burden keeps increasing.
The changing role of the charity and voluntary sector and the growth in the social enterprise sector have blurred what were clear distinctions in years gone by. As more public services are contracted out to the sector, and as the advocacy role becomes more crucial, the relationship between central government and the sector becomes much more multilayered and highly complex.
The 2014 Act has highlighted some of the dilemmas involved in the Government’s relationship with the charity sector and exemplified some rather poor process by government. I speak as someone who has some sympathy with the underlying objectives of that law: namely, that voters should be clear about who is seeking to influence their choice at election times. This is particularly important when it comes to campaigning in individual seats, where targeting national resources on small geographic areas can have a significant impact. At the same time, charities must be allowed to advocate, inform and question throughout the electoral process, as they do at other times. I am very struck by the briefings I have received in which there is a clear  divergence of view between the sector and the regulators about how clear the guidance is and how the law is to be enforced. This is clearly not satisfactory.
Most particularly, we need clearer differences between the routine advocacy of particular organisations and the intention of influencing electoral outcomes. In his excellent review, the noble Lord, Lord Hodgson, highlighted this point—and he was right to do so. Governments must be aware that in this area, as in others, charities are simply not going to run the risk of being non-compliant and therefore the so-called “chilling effect” on their activities in the run-up to an election is a real danger. Perversely, a measure aimed at transparency can end up as a gag.
The aspects relating to electoral law with regard to how one defines a member of the public highlight the perennial problem of how we keep regulation up to date. As the noble Lord, Lord Hodgson, points out, the practical realities of how you differentiate between activities aimed at the public and those aimed at committed supporters and members are very difficult in the social media age.
The Act also demonstrates the other hardy perennial: regulatory overkill. By creating a 12-month regulated period, the Government have effectively neutered charities’ campaigning activities for one-fifth of the time and have added significantly to the costs of compliance. I wonder, in parentheses, how we would manage should we move away from fixed-term Parliaments.
In a similar vein, the so-called “anti-lobbying clause” that was proposed and then withdrawn was a classic example of legislation being inappropriately created by government. It really was a sledgehammer to crack a nut, with no real underpinning evidence of the problem it was designed to solve. But the difficulty is that, despite its withdrawal, it has caused a lot of bad feeling and mistrust, and has further undermined what ought to be the proper, constructive relationship between the charity sector and government. However, even more worryingly, and coming back to the point of public trust, it helps to set the tone that somehow the sector is beset with problems which can be managed only when the Government intervene. That is fundamentally wrong.
We are in for difficult times. Recent events have highlighted some very real divisions in our country, which need addressing and which will take a lot of healing. The charity sector is probably better placed than any other to do this, given the centrality of its role in all aspects of our lives. Government needs to work with the sector and not against it.

Lord Lingfield: My Lords, I too thank the noble Baroness, Lady Hayter of Kentish Town, for this important debate, and draw your Lordships’ attention to my charitable interests in the register.
The noble Baroness pointed out to us that this country has always had an enviable history of charitable activity. Many of the charities extant today have their roots in the 19th century’s epoch of social reform, and some in that era were the response to specific changes in work or living patterns. I had the privilege of being  the volunteer director-general of the country’s St John Ambulance Association in the 1980s—I am delighted to see my colleague from those days the noble Baroness, Lady Emerton, here in the Chamber. That charity had grown from the requirements of communities to respond to the accidents which happened in mines, on the railways, in road construction and later in the electrical and gas industries.
From their beginnings, these charities were run and manned by volunteers, and over the ensuing century this became an important part of their ethos. Then things started to change, perhaps about 30 years ago. Many large charities started to so-called professionalise themselves, paying larger and larger salaries to ever-growing numbers of employees. Volunteers started gradually to find that their role was now to raise money to pay for these employees rather than to do much of the work themselves. Of course, it is true that fewer volunteers were probably available at that time, as charities had relied heavily on women and retired men for their voluntary workforce. As more women, properly, sought employment of their own, careers imposed more onerous obligations and many more leisure activities became available and part of life, voluntary work became less attractive.
Then Governments of all shades began to see that they could outsource the tackling of social problems to charities by paying them large grants to do the work. This has, on the whole, been a successful strategy, although some problems have arisen from it. First, some charities have distorted their founders’ missions—a point the noble Baroness, Lady Hayter, made—in order to qualify for government funding and to follow, dare I say it, the latest ministerial obsession, however well intentioned. Others have been obliged to put all their eggs into the Government’s basket, with the danger that, if policies change, they can be left high and dry.
Sometimes there has been an acute failure of financial supervision. We have recently had the debacle of Kids Company; a charismatic figurehead assumed almost total control, and public funds went unaccounted for. Also, government funding for charities is not always smooth. I have come across many instances of grants’ being confirmed for renewal only after the beginning of the financial year, sometimes many months afterwards, with the result that employees have had to be made redundant and have acquired new jobs elsewhere, to the detriment of the continuity of the project.
In recent years, however, there has been a welcome return to voluntary activity, as people realise that they can make a difference by doing it and at the same time gain much personal fulfilment. Labour’s Millennium Volunteers and the coalition’s big society, although neither project was particularly successful, helped raise awareness that our society has an urgent need of voluntary work to supplement the state’s provision in many areas, particularly healthcare.
Every year for the past 16 years I have had the honour of giving awards at the Mansion House to distinguished volunteers, all of whom have given up their time for decades to serve their communities without payment. They work all over the United Kingdom, in hospices, hospitals, health centres, servicemen’s charities, homes  for the elderly, and in many other locations, where their efforts are valuable and hugely appreciated. It is iniquitous that a greater part of the twice-yearly honours list is not devoted to recognising voluntary work of this kind. I trust that the various honours committees will bear this in mind. The wonderful work of the Olympic committees has been mentioned, but I very much hope that we will not see too many Olympic athletes adding to their already considerable laurels membership of the Order of the British Empire while hundreds of deserving volunteers have a lifetime’s work left without a sign of the gratitude of the state.
As speakers have pointed out, charities are big business now, but I believe that government departments should insist that charities that receive grants from public funds should have a good mix of paid and voluntary personnel. We are all living longer and longer. We shall need once again to encourage that charitable impulse for voluntary work in our communities to look after each other rather more than we do at the moment.
Charitable work, especially that which is voluntary, is greatly enriching for those who engage in it as well as being immensely beneficial to those served by it. I very much hope that the Government will consider commissioning a review to look at their relationships with charities, especially at those points which previous speakers have made this morning, and how best charities can be helped to continue to serve our society in the coming decades.

Lord Griffiths of Burry Port: My Lords, I add my thanks to the noble Baroness, Lady Hayter, for bringing this field of endeavour and experience to the Floor of the House so that we can enjoy a discussion of its various facets and perhaps focus our thinking about the way we would like things to go in the future. In the years that I have been a Member of your Lordships’ House, I have been only too aware of how poorly I have served the work of this place.

Noble Lord:: Not at all.

Lord Griffiths of Burry Port: Thank you. My noble friend is most generous. This is largely because, having a day job—largely in the voluntary sector, related to so many people involved in charitable work—my field of activity lies there, and I am in no doubt about that. It is, however, a joy to come here when I do, especially on an occasion such as this.
Perhaps I may take up a point that the noble Lord, Lord Lingfield, made a moment ago. He correctly said that work in the charitable sector and in civil society often supplements what is done by the state. In an age of austerity and cutbacks, I fear that it is too often becoming a substitute for what ought to be done by the state. The assumption that civil society and the voluntary sector can absorb the outcomes of government policy needs to be checked and tested.
I approach the whole question of charity with very mixed feelings. I am only too aware of how it excites a response on the part of those inclined to be charitable that, if we are not careful, simply maintains people in  a position of dependency. Sometimes, of course, such activity is necessary. People who are on the bread line and whose mere existence is under threat need that help, even if they risk becoming dependent on it but, on the whole, I look for activity in the field of charity that introduces the notion of capacity-building, autonomy, an ability to take charge of one’s own life and building those qualities in those on the receiving end, as it were.
Charities ought always in this respect to be free enough to be innovative. The state—even with the finest legislation passed through bodies such as this House—cannot always create the conditions that would impose the right pattern across society, which everyone can then enjoy. In the charitable sector, if there is real freedom to act, some quite startling things can happen, which then become models from which those who provide at a higher level can learn.
Many Members of this House will remember the redoubtable figure of Lord Soper. I inherited responsibility for a lot of his social work for a number of years and have enjoyed after-dinner speaking on the basis of it ever since. I remember my work in a day centre in west London—open 365 days a year and becoming increasingly professionalised in line with modern fashion, as the noble Lord, Lord Lingfield, said. It provided a range of services to homeless people, usually street homeless people, who had nowhere else to go—always over 25 year-olds. Youth work is much easier to fund, I can assure noble Lords, than old lads, as these were. Incidentally, is it not a shame that the work that was done by the previous Government—by Members on this side of the House through the rough sleepers initiative—to provide for the needs of the street homeless is being unpicked? We now see more and more evidence of street homelessness occurring in our day, when we really did think that a solution had been found.
At the day centre, there was one strand missing. We deloused, we fed, we provided advice, housing and all the rest of it—I could give so many stories of incidents and people from those days—but one thing was missing: a psychiatric social worker to help us with the mental problems of so many people living at their wits’ end and on the streets. Eventually, we found the money for that role. My instruction to this long-sought member of our personnel was very clear: “However long the queue of people wanting your services, you will give only 80% of your time to the face-to-face, problem-solving, advice-giving aspect of your work. The rest of your work will be concerned with accumulating notes of the kinds of conditions that you are discovering and statistics about the nature of the problems you are encountering”. I said to her that people like me would need that evidence as the basis upon which we made representations to public bodies and to the Government —it was essential that we did that work and it was integral to her work. I believed that then and I believe that now.
It is so important to give charities the freedom to innovate, to learn and to accumulate experience on the basis of which a view can be brought to Governments—which are often more than one stage removed from the experience of these things—in order that we may form an opinion, frame legislation and take the whole thing  forward in a constructive way. I have lots of other experience of institutions where, because they took government money, they found themselves constricted by government pressure to do their work the Government’s way. I regret that, and I want to make a general point at the early stage of this debate. I plead with the Minister—or with whoever is summing up—to give us an assurance that the proper freedoms for charitable bodies will always be respected so that innovation, the accumulation of experience and evidence and a valid point of view put to those responsible for shaping our national life can always be made on the basis of facts that can be proven.
My notes would allow me to speak for another three and a half hours but, at this point, I forbear.

Lord Harries of Pentregarth: My Lords, I am grateful to the noble Baroness, Lady Hayter of Kentish Town, for initiating this debate. As she emphasised, charities and campaigning groups of various kinds play a vital role in our society. The health of our democracy depends not just on political parties but also on organisations which are rooted in the varied experiences of people’s lives being able to bring different viewpoints to bear, not least at election time.
It is absolutely right that all such groups should be regulated and that they should be required to be transparent in what they do. At election time it is again right that they should not be able to spend money disproportionately compared to political parties and candidates. However, Part 2 of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 was itself disproportionate in the way in which it sought to limit third party campaigning at election time. It was hastily put together without consultation, driven by a fear of American-style political action committees coming to this country—a fear without serious foundation. The evidence of third party groups was, and is now, that it would, and does, seriously inhibit their legitimate activity.
The House was, thank goodness, able to achieve some little improvements in this lamentable piece of legislation, one being that there should be a review of how it worked at the last election. That review, under the chairmanship of the noble Lord, Lord Hodgson of Astley Abbotts, has now taken place and the report published. We are very grateful to him for it. It bears out many of the criticisms made in this House during the passage of the Bill and urges some significant changes. Many of these were argued for by the Commission on Civil Society and Democratic Engagement, which I have the privilege of chairing.
I will briefly summarise some of these recommendations. First, instead of the phrase,
“can reasonably be regarded as intended to promote electoral success”
for any party or candidate—which was thought to be too wide and uncertain—the Hodgson review recommends that this should be changed to one of actual intention to procure success in an election, along the lines of the Representation of the People Act 1983. I believe that this change would be welcomed  by charities in particular, because it would be aligned with what their status as charities allows them to do anyway.
Secondly, the review recommends that the electoral period for regulation should be reduced from one year to four months—the same as for European and devolved legislatures. All the evidence submitted shows that third parties focus on elections at the most six months before the date. To require them to delineate expenditure relating to the election from normal expenditure a whole year before is an unnecessary, bureaucratic burden.
A third area of concern is how expenditure for joint campaigning should be allocated. It is good practice for charities to work together when appropriate and possible, but Part 2 of the lobbying Act in effect frustrated this purpose. The Hodgson review recommends important changes in this area.
Those are just a few of a number of important recommendations. My first question to the Minister is: when is the Hodgson review to be brought before the House? When would she see these vital changes, if agreed, being made to Part 2 of the lobbying Act? It is deeply flawed and needs to be amended in order to ensure that third party groups can play their proper role without the undue chilling effect that the Act, as it now stands, has had.
My other main concern is the anti-advocacy policy brought in and announced by the Government in February. The Government’s stated intention was to prevent funds paid to charities by government being used to fund lobbying. As has already been mentioned by a number of noble Lords, this has aroused widespread disquiet. The fact is that charities are regularly called upon by officials within departments to bring real-world experience of users and evidence-based expertise into public policy, and to engage with parliamentarians on these issues; for example, through providing evidence to Select Committees.
Clear guidance already exists about what charities can and cannot campaign and advocate on. However, it is critical that charities are able to speak up on behalf of their beneficiaries and are seen to be independent from government regardless of their financial arrangements. Charities are concerned that this clause could be perceived as limiting what they can and cannot say about important issues for fear that this will have an impact on their funding. Therefore, my second question to the Minister concerns this proposed policy—if it is still in place, as there seems to be a great deal of confusion about whether this proposal will be enacted. Perhaps the Minister will clarify that. Does she not fundamentally agree—as put so powerfully by the noble Lord, Lord Griffiths of Burry Port—that charities that are in the front line of trying to respond to human need are best placed to bring before government the way in which policies can help or hinder the meeting of that need, and that bringing this experience and expertise to bear on government thinking is therefore vital and should not be inhibited in any way?
I was very surprised by the bitter criticism of the National Trust expressed by the noble Lord, Lord Patten. As a member of the National Trust—one of its, I believe, 4 million members, the biggest mass organisation in the country—I am deeply grateful to it  every time I walk a nice piece of coastal path that it has acquired. The noble Lord particularly supports farmers who want to continue to graze sheep on the uplands. However, his policy is strongly opposed by people with such disparate views as those of George Monbiot on the one hand and Sir Simon Jenkins on the other, who argue that most of the problems of flooding in the Lake District are caused by overgrazing of sheep in the uplands, and that if it is rewilded, as it is called, the water will be able to seep into the ground and the problem of flooding will be greatly alleviated. It is absolutely right that an organisation such as the National Trust should make that view known and, in so far as it is able to implement it on its own property, that it should be able to do so. Of course, there is the point of view of farmers and others but it is right that the National Trust should also be able to express its important point of view gained from its own experience.
However, my main point is that campaigning groups and charities play an essential role in making our democracy vibrant and living and their ability to do this should not be inhibited in any way.

Lord Haskel: My Lords, as I understand it, the Government have put on hold the rules regarding the lobbying activities of organisations that receive taxpayers’ money. They are right to do so because their thinking is very confused.
It is not anti-government to seek the best welfare for our fellow citizens. It is not anti-government to seek the highest standards of health and safety. It is not anti-government to seek the highest standards of truth and accuracy in reporting the news. It is not anti-government to have a say in genetic manipulation. I say to the noble Lord, Lord Patten, who is not in his place, that it is not anti-government to seek higher standards of conservation. These are some of the voices to which my noble friend Lady Hayter referred—the real-world experiences, as the noble and right reverend Lord, Lord Harries, put it—voices which tell us where government policy is failing and where our priorities should lie. These voices want a say in shaping society, not by revolution or violence but by balance—the kind of balance about which my noble friend Lady Jowell spoke. These voices need to be heard. They are not voices that the Government should seek to silence because they are funded by the taxpayer. It will not have escaped the Minister’s notice that the very reason these organisations are sometimes funded by the Government is that both seek the same ends. But democracy and the welfare of society are the not the only reasons why the Government should listen to trade unions, charities and civil society. These organisations are also the voices of progress—social, scientific, medical and commercial—based on experience, as my noble friend Lord Griffiths put it.
We are debating the Investigatory Powers Bill at the moment. Technology has given us new ways of communicating—ways that make our lives easier, our communications quicker, more social and more fun. But these ways are also available to criminals and terrorists. This Bill will clarify to what extent our communications can be intercepted and recorded by the authorities. Previously, powers of interference and  access to records were created as and when the need arose. However, in debate on that Bill, we hear quite clearly the voices of civil society, reaching a balance between the commercial interests of the communications business, the concerns of our national security and our right to privacy. Without the voices of civil society, charities and trade unions, I doubt whether a satisfactory balance would be achieved on the Bill.
More technology is on the way which will require this kind of balance. Let us take, for instance, the changing world of work. Several million people are now working off digital platforms. It suits the operators to say that these people are self-employed so that the minimum wage, holiday pay, sick pay, maternity pay, training, safety, pensions and tax are nothing to do with them. It is left to the state to pick up these costs through welfare payments and tax credits. I am sure lobbyists for platform operators and internet service providers put a very good case to the Government for their own commercial objectives. But what about fairness and costs to the public? Trade unions, civil society and charities—yes, sometimes even funded by the Government—are the ones speaking up for these things, and fairly soon some sort of balance will have to be agreed. Digital platforms themselves could be required to ensure that users comply with current regulations, and workers could belong to some kind of trade union co-operative. Then neither workers nor users would be vulnerable to exploitation.
In many other areas of new technology, charities are in the front line to achieve balance. We hope that some of our more serious medical problems will be eliminated by genome editing. For some, altering our chromosomes and genes can be a terrifying prospect. It is contrary to the faith of others. Yet it holds out the prospect of quick and relatively cheap medical miracles. Unless charities and civil society set about explaining these issues through some sort of public understanding campaign, to encourage sympathetic public opinion, the benefits of this wonderful medical research will take a long time to be accepted, if ever. I hope the Government are lobbying the charities and giving them donations to help with this work, for the sake of the nation’s health.
Lots more things are coming down the line where a balance will have to be achieved between commercial interests, security and the public good: the internet of things and digital money, to name but two. My noble friend Lady Hayter is absolutely right to move this debate and I congratulate her. Uncertainty on how to respond to the changes brought about by new technologies will lead to inaction and lost opportunity unless the input from society brings about acceptance and understanding, through balance and fairness.
For the sake of progress and the public good, the Government should listen to all these voices equally and not give disproportionate influence to company voices, nor quieten the voices of tax-supported charities. We need them all equally to better inform our decisions.

Lord Hodgson of Astley Abbotts: My Lords, I begin by thanking the noble Baroness for having given us the chance to debate this important topic. As some  Members of your Lordships’ House will know, I have prepared a number of reviews of the sector. The work that I have done and the people I have met lead me to associate myself entirely with the noble Baroness’s remarks about the contribution that the charitable and voluntary sector has made to our society, especially as regards social cohesion.
However, there is an important cautionary word, which was raised by the noble Baroness, Lady Scott of Needham Market, who is not in her place, and it is that charitable status is not of itself a guarantee of good behaviour. I fear that there have been too many cases where governance, procedures and approach have fallen short. No matter that the vast and overwhelming majority of charities are doing the splendid job to which the noble Baroness referred; the sector needs to remember that its reputation with the public is as good as the weakest link in the chain. I am confident that the committee of the noble Baroness, Lady Pitkeathley, will investigate that, to find ways of making sure that the good stories are not driven out entirely by the bad.
I turn to my review of Part 2 of the transparency of lobbying Act. I am encouraged by the fact that a number of speakers so far have seemed to agree with my conclusion that we should aim for the maximum transparency on the issue of how and by whom the general public are influenced at the time of a general election. That must surely be the only way to maintain public trust and confidence in our electoral system. Elections must not be capable of being bought by third parties of whatever colour or persuasion operating behind a green baize door. At the same time, we need to make sure that the system does not constrain vigorous public debate, and that is the difficult balance that we have to strike.
Within the 100 pages of the review—I take this opportunity to thank everybody in the country who contributed by attending meetings and sending in evidence to the debate; I also thank the Cabinet Office team led by Cathryn Hannah and David Rowland, who helped prepare the report—there are perhaps two really critical matters. The first is: what needs to be regulated? I defined that as electoral campaigning— that is,
“activity focused on influencing the choice of the voting public at an election”.
I do not think that that regulation should cover advocacy of an issue that an organisation may carry out on a day-to-day basis—what I describe in the review as “business as usual”. Nor should it cover political campaigning which third parties carry out in talking directly to government, Members of your Lordships’ House or Members of the other place. Frankly, if we and Members of the other place cannot “aim off” to take account of the blandishments of such people, we are less good than I think we should be.
If that broad approach is accepted—of course, these are not absolutely discrete silos; one washes into another—one can safely recommend a shortening of the regulated period. In my view, the general public in the saloon bar of the Dog and Duck become aware of an impending general election only about four months  ahead of the date of the election. Therefore, I feel that we can safely reduce the regulated period and thus the associated paperwork to the four-month period, as was mentioned by the noble and right reverend Lord, Lord Harries.
The second issue is: what constitutes a member of an organisation and therefore someone who can be approached without falling to be included in the cost of any lobbying activity? Historically, membership has been pretty easily defined—you fill in a form or you send in a cheque, a postal order or some money. But nowadays, with social media, these certainties have been blown away. A tick in a box or an email sent to hundreds of thousands of people at very low cost can make you a member. It will be only a matter of time before the concept of a negative pledge is used—that is, if you do not tick the box, you will be considered a member.
In my view, this potentially offers a serious loophole to the whole practice and risks undermining the lobbying activity in a very important way. So I have proposed the concept of a constitutional member who can influence the organisation of which they are a member, and I have laid out a number of tests that should be followed to ensure that that is being met.
However, as other noble Lords have said, third-party campaigning does not itself lead to neat definitions and packages. The continuing rapid rate of change in social media means that there will be a continuing impact on the way that third-party campaigning practices take place. For example, I had an analysis carried out of the use of Twitter in the Bradford West constituency at the last general election. It was a particularly vicious and fiercely fought campaign. Of the 35,000 Twitter users who referred to candidates in Bradford West, only 330—fewer than 1%—marked Bradford as their home address, compared to 12,000, or about one-third, who marked London and 506 who marked Pakistan. So I believe that, increasingly, campaigning will no longer respect national boundaries, and this will represent a challenge to us all.
In March this year, I presented my review to the then Minister, John Penrose MP. The broad conclusions and approach were, I think, welcomed by the sector and by the Government—if I judge ministerial responses at Question Time right. But so far there has been no official response, and I am asked frequently by those who helped me with the review what happens next. We appear to be in a good place. The sector appears reasonably happy and the Government seem reasonably happy. I hope that they will not allow the good will that they have rightly earned to be dissipated by undue delay.
I hope that my noble friend will enlighten the House on progress during her closing remarks. If she is not able to do so, I fear that I may have to intervene to press her a little harder.

Baroness Rebuck: I think that most noble Lords would agree that there was much fiction among the arguments put during the recent Brexit campaign. Obviously I am not going to defend the fictitious slogans on campaign buses, one of which stated that  Brexit would provide an extra £350 million a week for the NHS, but I am going to stand up for fiction in this debate, the importance of 100% literacy and reading for pleasure as an essential ingredient in our democracy, and the role played by charities and trade unions in achieving this. I declare an interest as a book publisher and from a lifetime’s engagement with most of our literacy charities.
The benefits of fiction have been known for some time. It is associated with high levels of empathy and improved relationships with others. Reading for pleasure has been linked to a reduction in the development of dementia in later life and to helping alleviate depression. Almost twice as many people who have low levels of literacy also suffer from depression. The journal Social Science & Medicine recently reported that cognitive engagement, or deep reading, regenerates the brain, and that people who read an average of half an hour a day—I include in this, I hope, all noble Lords—may well live, on average, two years longer than non-readers.
Studies have shown that visits to libraries improve general health, saving the NHS some £27.5 million a year in England in reduced GP visits. Perhaps we should put this figure on the side of buses. Perhaps we should also put it on the side of mobile libraries and even ambulances, to recognise the value of reading to our health. Sadly, however, our libraries themselves have not been in good health; many have died, and the epidemic continues. We have seen more than one library a week close across England since austerity measures were introduced, and Lancashire just announced that it is about to close 29 of its libraries. We must urgently bring the library network into remission.
Of course, the real patient is our democracy. There has been much analysis of the referendum result but perhaps we can agree on one thing: too many in our society feel disconnected, disempowered and are disengaged from politics, particularly the young. The Prime Minister alluded to this in her first speech in Downing Street when she said that her Government would be not only for the privileged few but for every one of us, and she gave a list of “burning injustices”. If she is to live up to these words, the Government should focus on the lack of literacy, which is at the heart of so many of these injustices. Around 9 million people of working age in England have low basic skills. The proportion of 16 to 19 year-olds who have low literacy is the highest of the 23 countries in the OECD’s 2012 survey. We are the only developed nation where our young people significantly underperform their elders.
I hope the Government agree that reversing this trend would help give people more control over their lives and that in “making literacy and numeracy a fundamental right of all adults” we should begin by harnessing all the innovation in the charity sector. One person in six in the UK lives with poor literacy, as I have said. As a child they will not succeed at school; as a young adult they will be locked out of the job market; and on becoming a parent they will not be able to support their child’s learning, leading to a cycle of deprivation over generations. Lacking these vital skills undermines people’s well-being and stops them making a full contribution to the economic and cultural life of our nation, and it harms our democracy.
If we want to compete in the digital world and the knowledge economy we need to lead in literacy, not trail in it. It makes economic sense as 100% literacy for all adults would boost our economy by some £80 million a year. Sadly, however, many employers still say that they cannot find enough skilled employees. So this does not mean just focusing on raising the numbers achieving entry-level skills but on improving the performance at the very top. Only a quarter of UK graduates have top-level reading and writing skills compared with at least a third of those in other developed nations.
Alongside literacy charities, trade unions are also playing a significant role in helping to meet the skills gap and increasing social mobility. It is 10 years this year since Unionlearn was established. During that time, 35,000 trade union learning reps across the country have helped more than a quarter of a million people improve their functional skills in English and maths. Often training is peer-to-peer, with dinner ladies teaching other dinner ladies, train drivers teaching other train drivers and prison officers teaching other prison officers and prisoners, too, 60% of whom, let us remember, have very poor literacy.
On the literacy charities themselves, we must embrace and value the work of all of them and government should draw on their expertise and innovation. The National Literacy Trust has established ground-breaking hubs to target interventions where they are most needed and partnerships with tailored approaches to meet local literacy needs. For example, three years ago five year-olds starting school in Middlesbrough were 23% below the national average in school readiness. The local hub has transformed this to a gap of just 6% today. In Bradford, over half of its eight to 16 year- olds are encouraged to write something daily which is not for school. They are now almost 10% above the national average, with a transformed attitude to writing.
The Reading Agency—an independent charity, where I declare a particular interest in the Quick Reads initiative—each year commissions major authors to write short books that are specifically designed to engage emergent readers with an average reading age of nine years old. Since 2006, 7.5 million books have found their way to emergent readers, including outreach work via hospitals, prisons, community centres, factories, army bases, libraries and adult education centres.
For many of our most disadvantaged citizens, Quick Reads has been a lifeline, inspiring confidence in more than 90% of emergent readers and encouraging more than 55% to be confident enough to address further learning needs. In Camden in north London, for example, Quick Reads was used in a pilot scheme with white working-class mothers in a book group to address their sons’ underachievement at school, another injustice highlighted by our new Prime Minister. The mothers sped through their first books and quickly became avid readers, taking an interest in their children’s education, often for the first time, with a marked improvement in attendance, confidence and school results.
My last example comes from the Learning and Work Institute’s groundbreaking Citizen’s Curriculum, which teaches the core capabilities needed for life and work in the 21st century. As a result of this training  scheme, Rochdale council has found increased take-up of public health services, such as drug and alcohol support, and a 14% decrease in call-outs to police. The latest pilots suggest that public services overall save £3 for every pound invested. This, I argue, is a model for civic engagement. My point is that charities are the seed beds of innovation in our fight against illiteracy and inequality of opportunity and while the Government have assisted literacy charities with funding in the past, over the last five years that funding has been dropping. Surely it is in all of our interests for these charities to be well funded. The private sector plays its part but private money can often be withdrawn, leaving important initiatives in limbo. As my noble friend Lord Griffiths has already so eloquently argued, we also need to ensure that the best and most effective charity pilot schemes are adopted and scaled up by government in a move to achieve a once in a lifetime goal—100% literacy. This is my plea to the Government.
I have one final point. Literacy charities may help many of those without a voice to gain one through improved skills. This helps our democracy to survive and thrive. However, just as the people they help need a voice, so too must the charities be allowed to campaign. They must be able to challenge and lobby government for change. Any attempt to reduce that ability would take us a further step away from the desperate improvement needed in literacy, improvement that is essential to the health of our nation, our economy and our democracy.

Bishop of Derby: My Lords, I, too, want to thank the noble Baroness, Lady Hayter, and I want, in the nicest possible way, to take for granted what she said, because it was very important and I agree with it absolutely. I want to invite us to look at the last three words, “in a democracy”, as a very important context for this discussion and debate, not least for the role of charities, trade unions and civil society.
Democracy works through two very important elements. One, of course, is the offer of ideas and suggestions about what to do to best order society. It is about answers to problems. The lobbying industry and the contribution that charities make to that, as the noble and right reverend Lord, Lord Harries, and the noble Lord, Lord Griffiths, and others have shown, is very important—“From our experience, here is the answer to this kind of question”.
However, democracy also requires space for those answers to be debated and other options to be looked at, which is the role of a body like Parliament. I want to invite us to recognise that, in our culture, there is an enormous deficit of spaces for lobbied answers to be examined and alternatives explored in a mature and participatory way. Not least that is because a lot of our media offer answers from pretty entrenched ideological positions, and therefore stoke up the lobbying side of democracy rather than provide space for genuine debate and the looking at alternatives.
From my own experience, I can testify to the hunger people have to participate in debate and discussion and not just swallow ready-made packages from whoever is putting up the answer. In the city of Derby a couple  of years ago, I set up a commission for the city, and in eight public meetings hundreds of people came to look at education, unemployment, policing and various things. From that has come all kinds of on-going work, where people got engaged in our city about what citizens, charities, the local authority and others can do in these areas to better improve the quality of life. There were no smart answers; there was an invitation to engage in a process of asking the questions and exploring options and partial solutions. With MPs in our county, I regularly organise summits on things like immigration, refugees and slavery and invite citizens to come, from all kinds of persuasions, and look at the options and not just the answers.
Some of your Lordships may think that, of course, I stand for a Church that is always criticised for not having any answers on anything at all and is always prevaricating on the big questions. But if you are to be a broad church, which a democracy needs to value, you have to take seriously a variety of experiences and aspirations, and create a space for them to feel that they have been taken seriously. In a way, that is what my Church tries to do, and I think good politics needs to operate like that, too.
I want to point to three areas that the Minister might like to comment on that might allow us to take seriously the needs of our democracy, which I think at the moment is overloaded with answers but provides very little space to discuss questions and a variety of possibilities which people would be drawn into to participate.
The first area is the potential of trade unions, which the noble Baroness referred to in her opening speech and about which we have heard a couple of other mentions. Trade unions can easily be caricatured as lobbying machines for particular things. In fact, we know from their history and their present practice, as the noble Baroness just said, that they have enormous skill and wisdom in inviting people—in the contexts of work, their communities and broader life—to engage from the micro to the macro. That is a very precious part of our democratic ecology. We need to foster an attitude towards trade unions and what they can bring that is positive and encouraging. There is too much negativity based on a narrow view of what trade unions are about. It will be interesting to hear what the Government think about the potential of trade unions to grow this skill they have to enable ordinary people with ordinary experiences to participate in looking at the questions and not just the answers.
The second area that I invite the Minister to comment on, if we want to take seriously the health of democracy, is that, quite rightly and commendably, the Government are always conducting reviews and consultations, often online. I suggest that these reviews and consultations could be not just a platform for lobbyists to chuck in all the answers but designed for a more participatory exploration by citizens of what options there might be and how new ideas might emerge from the collision of some of the pre-packaged solutions. A great deal of creative work could be done in this whole culture of review and consultation that the Government rightly spearhead to engage citizens in the democratic process and not just indicate that they need to choose between one answer and another.
Finally, I am sure that the Minister will comment on not underestimating the value of churches, civil society and charitable spaces, where actually, as other noble Lords have said, volunteers have passion and commitment and want to explore options not just for particular sectors but for the well-being of the whole of society.
I think that democracy is in danger of being distorted by an oversupply of answers. I hope that this Motion can also be interpreted, therefore, as looking at some of the potential sites and sources to recognise that, besides answers, we must value the importance of questions.

Lord Shinkwin: My Lords, I also thank the noble Baroness, Lady Hayter, for giving your Lordships’ House the opportunity to debate such an important issue. I join with her and the noble Baroness, Lady Jowell, in paying grateful tribute to the noble Lord, Lord Rix.
I spent almost 20 years in public affairs and campaigning in the charity sector, so I will confine my remarks to charities. I count myself privileged to have seen first-hand the vital role that they play in our democracy. Throughout my time in the charity sector I have seen that being able to demonstrate a clear connection between donor support and the tangible benefits of the campaigns that their time and support helped fund was crucial to building trust. It is that trust that underpins the success and sustainability not just of charity campaigning but of the sector itself. Trust is our charity sector’s life-blood, and right now it is in urgent need of a transfusion.
Sadly, I witnessed a serious breach of trust, which underlines that urgency. I bring it to your Lordships’ attention out of the same sense of public-interest duty that first drove me to stand up and be counted on what I still regard as a matter of honour. The duty to speak truth to power without fear or favour is surely all the greater because of the privilege and responsibility that go with being a Member of your Lordships’ House.
The situation I found myself in as head of public affairs at the Royal British Legion underlines the compelling need for far greater protection for whistleblowers brave enough to raise legitimate concerns about ethical issues or mismanagement in the charity sector. Whistleblowers are often dismissed as disgruntled former employees, but I know I will only ever be a proud former employee of the wonderful organisation that is the legion. Happily, the charity is now under new management. Moreover, the excellent new director-general, Charles Byrne, was not there when this situation arose.
If helping to win the campaign to save the chief coroner, with the essential support of your Lordships’ House, was my proudest moment at the legion, being bullied by a then senior director at the charity in an attempt to get me to sign off payment of an invoice that I had advised was of dubious legality—and moreover, to learn subsequently that the then director-general had nonetheless approved payment—has to count as the saddest moment of my career. The fact is that I was unable to prevent his approval of payment of donors’ money to an individual who should never have received one penny of legion charitable funds  that were donated in trust. It still haunts me that this happened on my watch as the legion’s head of public affairs and could happen again today at any charity.
I can never forget my disbelief at what happened: the invoice from a parliamentary researcher, on paper giving his Westminster email and phone number, and his personal bank account details; a parliamentary researcher, who, unbeknown to his boss, demanded payment for meetings arranged, briefings drafted and Parliamentary Questions prepared; my written advice that no payment should be made, given that any parliamentary researcher who demanded payment for such services should not be trusted, notwithstanding that a second version of the invoice was submitted by email omitting reference to preparing Parliamentary Questions, but for good measure attaching a list of Parliamentary Questions tabled; the bullying emails sent to me by the then director of welfare at the legion, who is now the chief executive of Combat Stress, asking me to process payment of the invoice now; and the email from the then director-general of the legion belatedly informing me that he had approved payment of the invoice.
I have no reason to believe that the email from the then director-general, confirming that he had approved payment, was a lie. I must take his word at face value and assume that he wrote the truth. But even if he did not tell the truth and payment was not made, it would surely be missing the point entirely if we accepted that somehow that makes such behaviour all right. Either way, if he did not tell the truth, lying to one’s colleagues, quite apart from permitting an environment in which a senior director thought it okay to bully a junior colleague on an ethical issue, is no way to lead a charity. How could such behaviour be in any way deserving of the trust that millions of donors rightly place in the legion year after year? If there is no wrongdoing, why did the then director-general, as I discovered only subsequently, neither consult nor even inform the charity’s then national chairman about such a sensitive issue? Would the trustees of Combat Stress have appointed their new chief executive had they known of her bullying behaviour and involvement in this serious matter? I assume that she did not tell them. Had anyone told me that such behaviour was possible at the legion, I would never have believed them—but for the fact that I experienced it myself.
In closing, surely the main lesson to be learned from situations such as this—to which the noble Lord, Lord Hodgson of Astley Abbotts, has already alluded—is that just because charities do good things does not mean that bad things do not happen in them, that some people in power do not abuse that power, or that some people in positions of trust do not betray that trust. If such behaviour is to be prevented, the integrity of our fantastic charity sector needs to be defended by far greater protection for whistleblowers. Only then will a strengthened charity sector once again enjoy the trust that is so essential to the success of its vital campaigning and policy-influencing work.

Lord Brooke of Alverthorpe: My Lords, I congratulate my noble friend Lady Hayter on securing this important and timely debate. I thank her, too, for  giving prior notice to the House that we will have a debate tomorrow on a Private Member’s Bill that I have introduced. The Bill seeks to repeal the Government’s pale imitation of a register of lobbyists that came in in 2015, and to replace it with a credible register that will allow genuine scrutiny of the activities of professional lobbyists in a wider range of organisations than hitherto, including charities and trade unions. I reserve for tomorrow’s debate the reasons why the current system has failed and what a sensible register would look like, such as the new one in Brussels, the good one in the United States, the one in Canada, or the one our neighbours and friends in Ireland have. Shortly we will also have a new register in Scotland. I will endeavour to set out how we can achieve this in a straightforward and cost-effective manner.
The problem with lobbying in this country has long been recognised, including by the previous Prime Minister. In 2010 he described it as,
“the next big scandal waiting to happen”.
He also rightly identified it as an issue that crosses party lines. My party has experienced its fair share of scandals. Indeed, it was a sting by Channel 4 in March 2010 featuring predominantly ex-Labour Ministers offering to help companies lobby in return for payments that prompted the 2010 incoming coalition Government to promise to shine a light on lobbying.
In recent weeks we have heard rumblings of a new potential source of scandal: the oncoming bonanza arising from the UK’s exit from the EU. When commercial lobbying firms are promising to connect clients with critical Brexit decision-makers so that they can shape the post-Brexit regulatory and business environment, it will not be long, I suspect, before we read more tales of back-room dealings in our press, unless we take action to avoid it. With every lobbying scandal, public trust in politics is eroded. We must do everything we can to raise our trustworthiness, and, where we can, to persuade those with whom we do business to act accordingly.
Many in this House, myself included, will argue that lobbying is an essential part of good governance. It ensures that outside interests are listened to and it leads to better decisions being made. However, it can also pervert our democratic system by allowing those with the loudest voices—and often those with the deepest pockets—to dominate the discussions, and also, in turn, to influence the key decisions. As David Cameron said,
“we all know how it works. The lunches, the hospitality, the quiet word in your ear, the ex-ministers and ex-advisors for hire, helping big business find the right way to get its way”.
Those are the former Prime Minister’s words, not mine, even though you might have expected them to be coming from me. Given the Times article of 24 August, and its related leader article, he might have been talking about his former Foreign Secretary, the noble Lord, Lord Hague of Richmond, who, if those articles are correct, has taken up a paid role at a US lobbying firm that advises its mainly US corporate clients on how to influence the British Government’s Brexit plans. That is very interesting, especially in the light of the number of questions posed in this Chamber, and in the Commons, about the extent to which parliamentarians  are going to be able to know what is happening and how they will be able to influence the course of events in the Brexit plans.
The ease with which people revolve out of Westminster and Whitehall and into the lobbying industry only adds to the widespread perception that access and influence can be bought, and that companies have a structural advantage over the wider public. I particularly welcome, therefore, the Commons Public Administration and Constitutional Affairs Committee’s inquiry into the Advisory Committee on Business Appointments, which is in dire need of an overhaul, to ensure that trustworthiness is high on our agenda.
When it comes to lobbying, the solution is not greater restrictions but more sunlight. David Cameron, again, rightly identified the problem as one of transparency. He said:
“We don’t know who is meeting whom. We don’t know whether any favours are being exchanged. We don’t know which outside interests are wielding unhealthy influence”.
Six years after this speech, we still do not know the answers to those questions. A robust register, of the type that I will propose tomorrow, would tell us precisely this and no more: who is lobbying who, about what, and—if my Bill succeeds—how hard; in other words, how much money is being invested in those lobbying efforts.
Unfortunately, the introduction of the Government’s fundamentally flawed lobbying register was at the time overshadowed by their efforts to clamp down on charity campaigning, as we have heard so much about today during previous contributions. It was pushed through at unnecessary speed, and attempts by this and the other House to improve it were brushed aside. That is why I will return to it tomorrow: to give ourselves time for proper, serious debate over an issue that has not been solved, has not miraculously gone away and will continue to do damage to British politics and our way of life until we act.

Lord McKenzie of Luton: My Lords, I too congratulate my noble friend Lady Hayter on securing this important debate and for the clarity and conviction with which it was introduced. It is wide-ranging in its scope but, like others, I propose to speak in support of the role that charities can play in a democracy, and explain how they can reach the parts which government sometimes cannot. I do this by sharing the story of one particular charity, NOAH Enterprise—New Opportunities And Horizons—of which I am privileged to be a trustee, as recorded in the register of interests.
I offer the description of its activities as evidence of the need to promote the importance of charities’ campaigning as well as their role in service delivery at the sharp end. I join those who argue for the rejection of barriers that place restrictions on charities, preventing them imparting their experience and pressing policy and funding issues on government, central or local, if for no other reason than that it would otherwise be a tragic waste of their experience and learning, often gained in the most difficult circumstances. It would be letting down the very people who these charities exist to serve.
NOAH is a charity that, out of Christian conviction, seeks to support the most disadvantaged members of the local community, particularly those who are homeless or at risk of homelessness, who struggle with drug and alcohol abuse or sleep rough, who have fallen into poverty, or who are otherwise marginalised and socially excluded. It endeavours to do this in a number of ways, but fundamentally by a holistic offering of services. It offers street outreach, persuading people to engage with the services on offer, including welfare—essentially food, clothing and personal hygiene—access to a GP surgery, mobile dentistry and a mental health clinic. It will seek accommodation for its clients and give advice on budgeting. It will further provide basic training in life and vocational skills and can provide work experience. Part of this activity is funded from a social enterprise involving furniture restoration, as well as from traditional charity shops. This enables work experience to be offered in such ways as warehousing, drivers’ assistance, woodworking, administration and retailing.
To give all this some context, in the year to 31 March 2016 there were 486 accepted referrals of people who needed help of one sort or another, while 22,000 distinct outreach visits were made and 6,426 breakfasts were served as well as some 17,000 lunches. There were also 484 people enrolled on courses at the new NOAH Academy, with 71 reaching employment. Moreover, it can claim numerous active partnerships with a range of statutory and third sector agencies, churches and community groups. It has also had the benefit of volunteers—around 300 a month at the current level—who support the operations in a variety of ways. This might be in furniture recycling, cooking for the day centre or working to provide food in the evening.
For NOAH, this level of support is vital to its continued existence. The motivation for the volunteers might be varied but many undoubtedly develop an understanding of the challenges of the most disadvantaged, which encourages them to give a voice to those without one. Many become unofficial champions of NOAH, spreading the word and building the support network—campaigning about what NOAH does and what needs to change. In a sense, they are like the “Games Makers”: for them, it is a chance to matter. NOAH has also been the recipient of the CSR efforts of a number of corporates, large and small, to the mutual benefit of all. This has been a two-way process whereby a few corporates have taken work placements.
The focus of NOAH is to assist and support the poorest in a journey out of destitution and towards a sustainable future. As the NCVO says, it addresses the causes of social problems and not just their effects. Its approach is to provide a pathway from living on the street to temporary accommodation and daycare, through to settled accommodation, training, work experience and preparation for employment—and then into employment. This pathway can be joined at any point. For individuals on that journey, there is the benefit of its components being delivered under the one trusted umbrella of NOAH, much of it delivered on behalf of the state but not by the state.
As with many charities, the era of austerity has meant pressure on its finances, particularly from statutory sources and at a time when needs are greatest. However,  its income sources last year included grants from statutory bodies for programmes such as Single Persons Homeless, the street drinkers project and Jobcentre Plus. Continuity remains a difficulty. Thirty-one foreign nationals were repatriated at their request last year, through a fund financed by Luton Borough Council. It also continues to get support from the Irish Government under their Emigrant Support Programme, which has been commendably sustained despite the recent recession.
Although there are, reasonably, always grant conditions, so far as I am aware nothing has yet emerged which prevents the charity raising public awareness and campaigning, particularly on poverty and homelessness. NOAH’s second annual conference took place in February with the theme of working together to address poverty in Bedfordshire. It was focused on statutory and third sector decision-makers in the county.
If I had to summarise NOAH’s benefits as an example of what a locally based charity can deliver and why it should be encouraged, I would list that it is driven by a clear and consistent vision; that it might be buffeted from time to time by the policy and funding swings of the statutory sector, and may have to adapt sometimes, but its focus is clear; that it can join things up in a manner which we know that government, local and national, finds difficult; that it is anchored in the community through its many partnerships and participation in local life, and through its proactive and articulate chief executive; and that it has the capacity to build trust among its service users and the wider community. It can reach the most excluded in our community, to offer hope, and seeks to recognise the fundamental dignity and worth of every individual.

Lord Balfe: My Lords, I add my thanks to the noble Baroness, Lady Hayter, for initiating this most valuable debate. I declare not only my register of interests declaration; like many Members of this House, I suspect, I have spent much of my life involved in charities, trade unions and other voluntary bodies. It is a part of the rite of passage into this Chamber for virtually everybody.
Charities have a very soft image but that is not necessarily the whole image. Near the beginning of the debate we heard from the noble Lord, Lord Patten, about his views on the National Trust, which have been well aired in the Times recently and probably in other papers as well. I am sorry that the noble Lord, Lord Bragg, is not here because he wrote a powerful letter to the Times which I found very convincing. I would have liked to have heard his side of that story. The sad truth of the matter is that, as with many institutions in society, charities have also faced their problems. They are facing a loss of trust.
I cannot remember which noble Lord mentioned the fact that the charities were not allowed to campaign during the Brexit debate. My prediction is that if charities had been campaigning in that debate, they would probably almost all have been on my side and campaigned for remain. But the most significant lesson of the Brexit debate is how out of touch we were; the fact of the matter is that many charities today are out of touch. There are well paid chief executives, in the  name of professionalism, but apparently accountable to no one. They are less accountable than a trade union general secretary or than a chief executive officer in a FTSE-listed company. They often exist in an area where there is no apparent democratic structure. Can anyone tell me what the democratic structure is of the Red Cross, Oxfam, the British Heart Foundation or the many charities that we see in our high streets? I do not believe that there is one—but there should be and, as such, it might well be time for this area to be revisited.
I do not subscribe to the philosophy that there are fewer people. There are in fact more people living longer and far more, particularly in my generation, who are available, fit and working. My wife holds a position in the U3A in Cambridge, which has 3,000 members in that one city. Admittedly, Cambridge is probably an exception but there are 3,000 retired people taking part in just one body in one city. There are a lot of people out there but there is a need for some control.
Chugging has been dealt with to an extent but it is still apparent on our streets. We should revisit the need for an extension of the Freedom of Information Act to the charitable sector. Why should what the charities do not be accountable? They are, after all, spending money raised from the public sector or volunteers. It is not, in large part, private money. Why should they use government money to lobby the Government? I do not believe that they should. I think the policy we have on this is quite right. I also believe it would be useful if we knew what some charities do. For instance, I have been told that the NSPCC does not inspect any children any more, but is purely a lobbying organisation. I am told that Barnardo’s no longer runs homes but lobbies. This is probably a useful thing, but the reality has gone a long way away from the image.
My noble friend Lord Shinkwin outlined a very serious and worrying case in which there was no apparent easy redress. It would be useful if the rigour which we apply to the trade union movement, with the forthcoming introducing of a new, beefed-up Certification Officer, was applied to the charitable sector. Perhaps charities should have a certification officer.
I shall make one aside to the noble Lord, Lord Brooke, on lobbying. I am appalled at the way in which people leave comfortable government positions, in which they are largely underpaid, and immediately go into very highly paid positions in which the only reason they are there is because of who they know from the other side of the case. It appears that the most the body we have for regulating the transition from public service to private service ever does is to send somebody on six months of gardening leave. I have been unable to find an instance of any senior politician or civil servant being prevented from taking a well-paid job on the other side. That is not good service to our democracy.
I shall finally say a word or two about trade unions. Trade unions exist at the other end of the system. They spend far too much of their time lobbying for things that are of no interest whatever to their members. One-third of their members vote for the Conservative Party, which shows a good deal of common sense  among average trade unionists. Most trade unionists join a trade union to be defended at work, to be looked after and to be protected in difficult circumstances. They do not join in order to be lectured politically. I am proposing not that we should do anything but that perhaps the unions themselves should take a more careful look at what they do. Every day I get emails from the TUC, and I see that Frances O’Grady has today sent a message to the Labour Party to get its act together ahead of the TUC in Brighton next week, which I shall be attending. I will be looking around, but I do not think it will do that. I look forward to the TUC sending messages to the Labour Party, the Liberal Democrats, the Conservative Party and others expressing the needs of working people. I say to the TUC: butt out. It is not your fight. Let the Labour Party and the Conservative Party sort out their own politics while you fight for the rights of working people, which is what you were set up to do in the first place.

Viscount Chandos: My Lords, I, too, thank my noble friend Lady Hayter for introducing this important debate and bringing to your Lordships’ House such a powerful analysis of the issues arising from the Government’s action and inaction in this area. My noble friend’s Motion is wide in its span of civil society as a whole and is focused on the specific area of lobbying and the inequitable and illogical approach the Government have taken to its regulation between charities and the corporate sector. I could not have made the argument on the question of lobbying better than my noble friend, and I wholeheartedly support what she said.
I shall speak primarily about the role of charities more broadly in society and the economy. I therefore draw your Lordships’ attention to my position as a trustee on both the grant-making and operational sides of a number of non-profit organisations which are set out in the register of interests.
The coalition Government launched with the then Prime Minister’s grand idea of the big society, a crude distancing of himself from Mrs Thatcher’s supposed nihilism combined with a convenient and hoped-for piece of sticking plaster for the injuries to be caused by the Government’s doctrinaire public expenditure cuts. The current Health Secretary made his pitch for political advancement from what was then his position of Culture Secretary—look where that got him and us—by rapidly agreeing with the Treasury large cuts to the DCMS budget while assuring the country that the arts would not be adversely affected as philanthropy could replace the lost statutory funding—a wholly unrealistic and implausible assumption, as we have now seen.
We then moved from big society to silent society, as the Government introduced, despite your Lordships’ best efforts, the arbitrary and prejudiced restrictions on lobbying by charities at the centre of today’s debate. Charities and civil society organisations, like the children or servants of a Victorian duke, should be seen but not heard the Government seem to be saying in response to the independent views and campaigning properly pursued by charities large and small. Lying behind  this, apart from a thin-skinned unwillingness to allow the Government’s prejudices and actions to be challenged, there was also partisan paranoia within at least parts of the Government and the media by which they are so influenced that because some of the best and brightest of the Labour Government and their advisers had chosen to work for charities after losing office—a continuation of their public service—the voices of those organisations should be restrained.
There is a new Prime Minister and a new era. What, then, after the big society and silent society, does the new Prime Minister and her Government see as the role of charities? The very first decision is unusually difficult to interpret. The Prime Minister moved the Office for Civil Society and responsibility for charities policy from the logical and effective location given it by the Labour Government in the Cabinet Office to the Department for Culture, Media and Sport. “I wonder what he meant by that”, said Talleyrand about the death of the Turkish ambassador and Metternich about Talleyrand’s own death. I wonder what the Prime Minister meant by that. She and the new Culture Secretary have both suggested that the work of the Office for Civil Society fits perfectly with the DCMS’s mission to enrich lives. Hmm—it is hard not to suspect that pressure on Cabinet Office resources as a result of the Brexit vote may be the driving reason for this change.
Front Benches in your Lordships’ House are, of course, famously versatile, so perhaps we should not read too much into the fact that the Minister is, I am sure to your Lordships’ delight, spared long enough from her Cabinet Office brief to cover the subject for which the Cabinet Office is no longer responsible. Yes Minister. As the Prime Minister, following the statement of the Secretary of State for Exiting the European Union about the single market, has ruled that Ministers can apparently express personal views that are not necessarily those of the Government, it may be unreasonable to ask the Minister to say how the Government now see the role of charities, particularly in the light of this apparent ambiguity of departmental responsibilities, but I look forward to her response very much none the less.
In the meantime, I can end only by trying to reinforce the points made by, among others, my noble friends Lady Jowell and Lord Griffiths and the noble Baroness, Lady Scott, that charities cannot and should not be seen as a substitute for the proper responsibilities of government and should be allowed and encouraged to lead, innovate and, as a consequence, take risks.
I have quoted Bill Gates on the role of philanthropy in the past, but the authority that he brings justifies returning to his argument. From a perspective drawn from founding the largest grant-making foundation in the world, from a base in a country where philanthropy has been deeply embedded for over a century and where, across the political spectrum, the role of government is seen as smaller than here in the UK let alone elsewhere in Europe, Mr Gates has been clear: philanthropy cannot substitute for supra-national, national or local government spending. He has argued that it should take more risk than either government or business. That risk should not be uncontrolled or unsupervised.  I agreed strongly with the noble Baroness, Lady Scott, that self-regulation should be the first line of defence and statutory regulation the second.
While there have been regrettable high-profile failures of governance in the charity sector, the general trend at the micro and macro level has been positive. In that context, I strongly welcome the establishment of the Marshall Institute for Philanthropy and Social Entrepreneurship at the LSE as the latest and most significant initiative to help enhance the effectiveness and impact of non-profit organisations.
There has been unanimity today about the key role of civil society within our overall society and economy. I hope very much that the Prime Minister, whatever the other pressures on her, will in due course set out her vision for civil society alongside her welcome and well-flagged commitment to industrial strategy. It need not—indeed, should not—be grandiose and overambitious like the big society, but should demonstrate her Government’s recognition of the proper role of civil society.

Lord Foulkes of Cumnock: My Lords, I add my voice to the well-deserved, growing chorus of thanks to my noble friend Lady Hayter for giving us the opportunity to discuss this today. I have sat through every speech and am a regular attender in this House, as some noble Lords know. I have found it one of the most interesting debates that I have ever sat through. It has not been repetitive. We often have debates where people say exactly the same as the person before them, and the same again. This has been really fascinating, not least the excellent speech by my noble friend Lord Chandos—I hope we will hear a lot more from him, because it was tremendous.
Following the speech by my noble friend Lady Rebuck, I am going to rush out and get some books after the debate. That reading is going to do me a lot of good, I now know. I will not just enjoy it, it will actually help me to live longer—so I am looking forward to that. This has been a really fascinating debate. I am very pleased to have sat through it and to be a member of the Select Committee on Charities, which has been mentioned. It is most ably chaired by my noble friend Lady Pitkeathley, who has vast knowledge of this area. She is chairing our committee with great skill, expertise and insight into the sector. I hope the committee will come forward with some positive recommendations. I think that my noble friend, when she speaks, will confirm that we are already being inundated with lots of recommendations, evidence and submissions.
However, as I have said to the committee—my noble friend Lady Pitkeathley knows this—I do not want us to have just the usual suspects: the ones who regularly give evidence on this subject. Otherwise, we will not get the new, innovative ideas. We have been trying to encourage people to come forward with new ideas and with things that they have tried and that have been successful or not. I think we can learn from that. I am really looking forward to the further formal evidence sessions when we come back in October.
I should have declared at the start—it is in the register of interests—that I am now chair of Age Scotland. Before I was elected to the other place in the  1970s, I was director of Age Concern Scotland, so I have been involved in that area for a while. When I was asked to become a trustee of Age Scotland a few years ago, the current chief executive, my successor, said, “We want you on, George, because we knew you would have an interest in it, having been director of Age Concern Scotland”. But he said, “You’ll have more of a vested interest in the subject now”. I swore at him and said, “What a—something—cheek”. But he was right; I do have an interest in it and I understand the issues much better by being on the wrong end of the age spectrum myself.
I have found the debate fascinating, but I refute almost everything that the noble Lord, Lord Balfe, said. I do not think that he understands the charitable sector at all. He said that we are not accountable. That is rubbish. We have an annual general meeting coming up later this year at which all the members—we have more than 1,000—will be represented. They will decide to re-elect or not the officers of the organisation. In Scotland, we are also accountable to the OSCR, the Scottish Charity Regulator, and in England to the Charity Commission. That is a great deal of accountability.
Having become a trustee, I have great piles of paper about the responsibilities of trustees. The grave responsibilities are putting people off becoming trustees. If they get it wrong, they are in trouble. The noble Lord, Lord Balfe—I was going to say “Comrade Balfe”—should understand that. Trustees are accountable, and certainly more accountable than any member of this House at the moment. It is really important to recognise that.
Most of the debate has been about lobbying. I am not going to say very much about it except that it is a pity that it has become a dirty word because of some of the scandals. There is absolutely nothing wrong in a democracy with any body, organisation or individual making representations, particularly to elected Members in the other place. That is what it is all about in a democracy. They are supposed to take account of the views of all the organisations working in our communities and in society. There is absolutely nothing wrong with it; it is democratic accountability—representation at work. That is all I want to say about lobbying.
My main point is that we on the Select Committee are already finding, and I am finding at Age Scotland and I know other people in other charities are finding, that charities are currently between a rock and a hard place, to use that old phrase—the upper and lower grindstones of the mill—and are being really squeezed. Charities are expected to do more and more. The need is growing, particular among the elderly. The number of old people is growing almost exponentially. As we live longer, the needs become greater. Loneliness is a huge problem that we are having to tackle. I echo what my noble friends Lord Chandos and Lord Griffiths said earlier: charities should not be taking on the responsibilities that should rightly be carried out by statutory bodies. That is clear, but we are still being asked to do more and more of the work that is rightly done by voluntary organisations.
At the same time, it is becoming more difficult to raise the money to do the work. We heard earlier about chugging. That is being questioned and challenged—and  rightly so. Philanthropy is not as widespread as it ought to be. Sometimes, it is the poorer people who are giving more—and certainly a larger percentage of their income and wealth—to charities than anyone else. It needs to be recognised that raising money is becoming more difficult. I hope that we will take account of this when we look at it in the Select Committee.
I have one last thing to say. We have three hours, so the noble Viscount, Lord Younger, should not worry too much—or indeed the noble Baroness, Lady Chisholm of Owlpen, for whom I have great respect, whether she is responsible or not, as my noble friend Lord Chandos said. I want to say a positive word about trade unions. I am a member of the General and Municipal Workers’ Union, and did a bit of work in this place for USDAW, the Union of Shop, Distributive and Allied Workers. Again, this comes back to what the noble Lord, Lord Balfe, said. USDAW asked me to take up an issue because its members were being attacked in shops, particularly when selling alcohol, and were being threatened; they were under tremendous pressure. I took up the issue and moved an amendment here. That is exactly the kind of thing that trade unions do to look after their members, so I hope that when the noble Lord, Lord Balfe, will listen carefully when he goes to the Trades Union Congress next week. I think that he will find a message there that he ought to take account of, just as he ought to take account of the message that charities are democratic, are accountable—and, equally, are doing a damned good job.

Lord Black of Brentwood: My Lords, I join all other noble Lords in thanking the noble Baroness very much for initiating this debate and allowing us an opportunity to talk about one of the brightest jewels in the crown of our national public life, which is our charities. I should declare that a number of the bodies with which I am involved as a trustee are registered charities, and these are listed in the register.
For me, as we have heard so often during this debate, there is one golden thread which links together all those organisations which make up the rich tapestry of Britain’s charitable sector, and that is the care they give to the vulnerable and the needy and the voice they give them. I want to talk about one specific group that looks after perhaps one of the most vulnerable in groups our society—our pets and animals. I welcome this opportunity to pay a heartfelt tribute to the vital work of the UK’s animal welfare charities. I was delighted that the noble Baroness, in her opening remarks, was able to put over some of the vital points that they have made to her. A great deal of the work they do, and how they deliver it, is highly relevant to this debate and to the important issues that have been raised.
We are a nation of animal lovers and pet owners. More than half of homes own, between them, 9 million dogs, 11 million cats and many other types of pet, including a growing number of exotic animals. I am an unabashed cat lover, and there is nothing my husband or I would not have done over the years to look after the seven cats who have been in our care. Indeed, the  vast majority of the UK’s pets are looked after extremely well, but not all are so lucky. We have a real problem with stray animals and with pets being abandoned, often due to economic circumstances or because owners failed to do research about caring for a pet before buying one online. Tragically, there is the ever-present horror of animal cruelty.
Those are the cases where our nation’s animal charities—to quote the noble Lord, Lord Foulkes, I think—go to the places that government cannot go to. That is where Cats Protection, Blue Cross, the Dogs Trust, PDSA, the RSPCA and Battersea Dogs & Cats Home step into the breach. The scale of the challenges they face, and of their achievements, is huge. Dogs Trust estimates that 100,000 stray dogs a year are handled by local councils, and it cares for a significant proportion of them—more than 15,000 last year. With cats, neutering is a real problem, and Cats Protection helped neuter 159,000 cats and kittens last year, in the largest companion animal neutering programme in the world, as well as rehoming 44,000 cats. For those pets in need of urgent medical attention, the PDSA provides more than 2.7 million treatments to pets every year, delivering wonderful care alongside the RSPCA and the Blue Cross.
For me, all these great organisations share five things in common which are central to the issues we are debating today. First, they are all civil society organisations that rely hugely on the tremendous, selfless support of volunteers—highlighted so well by my noble friend Lord Lingfield earlier on. Cats Protection, for instance, has 9,700 volunteers, the stalwart volunteers at Battersea Cats & Dogs Home last year gave 73,000 hours of service, and the PDSA saves £12 million each year thanks to its voluntary workers. Those are fantastic achievements.
Secondly, all the animal welfare charities are major providers of independent advice, information and education, helping people look after their pets responsibly and preventing neglect and cruelty. Blue Cross and Cats Protection last year spoke to more than 100,000 children and young people about responsible pet ownership, while the Dogs Trust ran more than 6,000 workshops in schools and youth clubs. That work would be much enhanced if young people were also to learn about these issues at school. If the Government could do one thing to help these very hard-pressed charities and their volunteer armies, it would be to make animal welfare part of the national curriculum in primary schools. Would my noble friend perhaps be able to look afresh at that?
Thirdly, these organisations all provide services that government cannot provide and which otherwise would not exist, including Blue Cross’s Pet Bereavement Support Service, Cats Protection’s Paws to Listen helpline for those struggling with the loss of a cat, and the Dogs Trust’s Hope Project, which helps the dogs of homeless people—all important services provided with no burden on the taxpayer.
Fourthly, these charities are an invaluable source of data and information for government, and also provide front-line services which help deliver on public policy. The best example is probably compulsory microchipping of dogs, where charities campaigned for the change—and it was absolutely right that they had the ability to do  so—and have now undertaken to deliver much of the chipping. Hundreds of projects nationwide are now involved in implementing this policy. Such has been the success of the initiative, I believe there is now a case to make microchipping of cats compulsory, too.
Another area where the sector works in partnership with government is in making online pet advertising more responsible, with excellent results. Thanks to the work of the Pet Advertising Advisory Group, more than 100,000 irresponsible advertisements—for instance, those advertising pregnant animals—have been removed from websites. Provision of data which government does not or cannot collect, for instance the PDSA annual benchmark about the well-being of companion animals, is also crucial in informing the development of policy and shaping future legislation.
Finally, perhaps the most important characteristic that all these charities share in common is that they provide a vital independent voice speaking out for animals and making sure they remain on the political agenda, and we must ensure they continue to have the ability to do just that. That message has come through loud and clear in the debate today. They all have skilled advocates researching issues, advising government, pushing for change and indeed holding us all to account for the delivery of policy. That is a hugely important role, and one we should cherish and encourage. We should not add any further regulatory burdens on to them.
We all know that our pets provide pleasure, companionship and a unique form of unconditional love which enriches our lives. We should do what we can to repay that. So let us salute the work of all those charities which, in advising and working with government, providing vital services at no cost to taxpayers, helping to educate young people and, above all, acting as champions for the voiceless, are a crucial part of the fabric of our civil society. These organisations do so much to care for some of the most vulnerable creatures in our society.

Baroness Pitkeathley: My Lords, like other noble Lords, I thank my noble friend for bringing forward this debate today and declare my interests as set out in the register. I am speaking today in my capacity as chair of the recently established Select Committee on Charities. I also thank my noble friend Lord Foulkes for his kind remarks—I will pay him later. The committee was established in June of this year to,
“consider issues related to sustaining the charity sector, and the challenges of charity governance”.
This is a broad remit, but one we will endeavour to tackle.
The charitable sector in this country has a long and proud history, as your Lordships know only too well. However, it is clear to me and my committee—and, indeed, I think to your Lordships’ House as a whole—that the sector is under pressure. In fact, in 40-plus years of working in and with the sector, I have never known it under such pressure. I know that none of this will be news to any of your Lordships, but it is worth reflecting on those pressures.
The scandals of recent years mean that the sector is under intense scrutiny. The impact of that scrutiny has been for the general public to start thinking more carefully about where its money is going. There is no doubt that there has been a decline in levels of trust in the sector, and though recent research suggests that trust is on the rise again, the sector can never be complacent. We know that the worst stories do not represent the best of the sector, but, equally, we know there is work to be done about regulation.
Of course, anyone who has anything to do with the charitable sector cannot fail to be aware of the huge financial pressures it faces. We are a very long way from the heady days of the early 2000s, when we all felt flush, when government money was being dished out to all sorts of strategic partners, to many different initiatives, and when local authorities were keen to go into partnership to deliver innovative schemes for tackling deprivation. We even had an advisory body in what was then called the Office of the Third Sector, now called the OCS, which I had the honour to chair. What is more familiar now is the winding up of charities, their disappearance rather than their expansion and innovation. At the same time, the demand for charitable services has increased with rising levels of poverty and deprivation and the results of austerity, as noble Lords have said.
To add to these pressures, there is the current political and economic uncertainty in light of Brexit. Your guess is as good as mine on what will happen next, but even the risk of instability is a challenge for the sector. We know that, as the country adapts to a post-Brexit landscape, the charity sector will be expected to adapt and evolve. I have every confidence that it will do so because the sector’s record of adaptation and initiative is well documented, but the road ahead may be hard.
We also have the new Act. I hope that the Charity Commission powers will be used cautiously and proportionately. The powers to make social investments are also an important step forward for charities, and I hope they will prove to be of benefit—I should declare my interest as chair of the Big Society Trust, which is set up to keep the Big Society Capital true to its mission of supporting the social sector. We should not, however, be deluded into thinking that social investment is a panacea for the money problems of the charitable sector. It is an important element but an element only.
Noble Lords know that the sector has had its share of both positive and negative parliamentary attention in recent years, but there was an appetite to look more widely at the challenges faced by the sector and how it can be most effectively supported in its important work. I acknowledge the hard work of the noble Lord, Lord Shinkwin, in bringing this to the attention of the Liaison Committee and for its decision to set up the ad hoc committee. The committee wants to help and support the sector and for this to be a positive engagement exercise which truly reflects the problems for everyone working with charities.
I have described the pressures, but part of what the committee wants to understand is the opportunities, as the noble Lord, Lord Foulkes, has said, that exist  for charities to thrive. We are clear as a committee that what must not be allowed to happen is that the excellent and essential work of so many charities should be blemished by the actions of a small minority. If we encounter complacency and poor practice, we will of course challenge them, but we are seeking to celebrate success and innovation more than anything else.
I am delighted to say that we have received more than 150 submissions to our call for evidence, the deadline for which was last Monday—but of course we are being flexible about that. Of those submissions, 112 were from charities themselves, and, of those, 28% were from charities with a turnover of less than £1 million. I think it is particularly important for the members of my committee to hear the voices of small and medium-sized charities. My committee and I have a busy few months ahead and some big questions to consider. We are up to the challenge and committed to making sure that the right policies and support systems are in place for the sector to continue to be such a valuable part of our society.
I turn now to the issue of lobbying. It is inevitable, when we think about charities, that we tend to focus on the services they provide, because that is what we are most familiar with. I am delighted that the title of our debate today includes the issue of lobbying activity because, to my mind, this lobbying, this voice, this representative function is one of the most important functions which charities perform.
I was proud to be, for more than 10 years, the CEO of Carers UK, whose sole function was to advocate on behalf of carers and to bring to the attention of government, the media and the general public the contributions made by carers and to ensure that they receive support in the important but stressful role they play. When I first worked in this area, the very word “carer” was unknown—indeed, it was nearly always misspelled as “career”. Now carers are out of the closet, and that is almost entirely down to the work of carers’ organisations enabling carers to make their case and gain support. There is still not enough support, of course, so the work must go on. Therefore, anything which in any way restricts the ability of vulnerable groups to lobby or put their case must be resisted at all costs.
I have spoken on this issue all over the world. Our tradition of charities being funded by Government to lobby Government is the envy of the world. It is the envy of many countries which are not so fortunate as the United Kingdom is to have that philosophy. I know many noble Lords feel as passionate about this as I do, and I hope the Minister will assure us that she does, too.

Baroness Chisholm of Owlpen: My Lords, what an extraordinary debate—absolutely fascinating. I wish to declare an interest: I have a daughter who is a director of Hanover Communications, though I have to say we speak mainly about babies rather than lobbying.
I thank the noble Baroness, Lady Hayter of Kentish Town, for tabling this fascinating debate, and take a moment to pay a tribute to Lord Rix, who was also  mentioned by the noble Baroness, Lady Jowell. He is going to be hugely missed for the extraordinary work he did with Mencap—and in the theatre. My first theatre experiences were going to the Brian Rix farces, which brought so much joy to us all. I also say that we wish the noble Lord, Lord Judd, a very speedy recovery.
The richness of the debate highlights the breadth of civil society expertise in this House and demonstrates the importance we all place on preserving and championing the vital roles of charities, trade unions and civil society within our democracy. I therefore welcome the efforts of the Lords Select Committee on Charities, chaired by the noble Baroness, Lady Pitkeathley. I know that many other of today’s speakers will continue to make a valuable contribution to the future work of this committee.
The noble Viscount, Lord Chandos, mentioned the role of the Office for Civil Society versus the Cabinet Office. I think this is the moment to say that this debate is focused on issues that cross departmental boundaries. The Cabinet Office remains responsible for grant-funding policy and the Transparency of Lobbying Act. It is the Office for Civil Society that has moved to the DCMS, where there are clear synergies, but obviously we all work in a joined-up way.
This Government are committed to supporting a healthy, diverse and sustainable civil society. Civil society is uniquely placed to respond to many of the social challenges we face and occupies a special place in our national psyche. Certainly, from the right reverend Prelate’s speech, it is clear how much the Church does in this area. The noble Lord, Lord Haskel, and the noble Baroness, Lady Pitkeathley, said that the Government need to pay heed to the voices of charities. Other noble Lords also mentioned this. The Government remain absolutely committed to engaging with and listening to charities. By way of one example, earlier this week, the charity sector leaders were invited to a round table with three Ministers to discuss the implications and opportunities for charities of exiting the European Union. I think that many charities feel anxious about how this is going to affect them, and it is very important that we engage with them from the beginning.
Charities fulfil many different important roles, from delivering public services, to supporting those in need, to raising awareness of particular issues. All these roles are important, and we are very keen to make sure that we are fully engaged. It is for this reason that we have recently reformed charity law with the Charities (Protection and Social Investment) Act 2016 and have supported sector-led changes to fundraising regulation. A sound legal framework provides the essential space in which charities operate. These changes are strengthening charities’ protection from abuse and helping to rebuild public trust and confidence in charity fundraising. I know that several noble Lords speaking today made important contributions to the development of these changes and I put on record my thanks for their involvement and commitment to supporting that vital work.
My noble friend Lord Patten mentioned problems with the National Trust. It is important to remember that members of the public, and indeed noble Lords, should raise these issues directly with charities where  they feel that there are problems. Noble Lords have heard what my noble friend has said today about the National Trust; it is important that they engage with him on these subjects.
The noble Lord, Lord Griffiths, mentioned that charities need freedom to innovate and to provide evidence of what is happening on the front line. Certainly, charities are independent and the law recognises that. They are free to innovate and campaign to further their charitable purposes. There are many good examples of charities innovating with great success and where charities’ evidence has been heeded in government policy.
We work in close partnership with civil society to make sure that we deliver our vision for a bigger, stronger society. We are working together and there have been a number of significant achievements. I will highlight just a few of these successes. Last year, 3 million more adults volunteered than in 2010—a tremendous increase in the number of people giving up their time to support good causes. More than 200,000 young people have taken part in the excellent National Citizen Service. They are volunteers; they are not forced to take up these roles. Volunteering among 16 to 25 year-olds is up by more than 50% since 2010. Our social economy is thriving: 200,000 social enterprises now employ more than 2 million people and the UK is recognised as a world leader in social investment and social impact bonds. Social action contributes £34 billion each year to public services, reducing the pressure on public services such as the NHS and schools. We have recruited more than 6,500 community organisers, who act as local leaders bringing people together to take action on the things they care about.
Despite what some may think, the number of registered charities has risen since 2010; their income is up by almost 35% to more than £71 billion and their workforce has continued to grow. The noble Lord, Lord McKenzie, talked about NOAH; this shows just what a local charity can do. The noble Lord, Lord Foulkes, mentioned the importance of giving and philanthropy. The CAF World Giving Index 2015 ranked the UK as the second most generous nation in the world, up from eighth in 2010. This is indeed quite an achievement.
We will continue to support civil society with our ambitious agenda for the remainder of this Parliament. At the heart of this is our expansion of the National Citizen Service, guaranteeing a place for all young people and progressing with the NCS Bill. We are committed to scaling up social impact bonds in areas such as youth unemployment, mental health and homelessness and have launched the new £80-million life chances fund. This fund will catalyse many more social impact bonds, tackling complex social issues locally, including drug and alcohol dependency. We have proven the concept of social investment—the task now is to scale up the model, so we can help even more of our fellow citizens. To this end, we have built a five-year partnership with the Blavatnik School of Government at Oxford University to create a government outcomes lab. This will become a centre of expertise for SIBs and innovative government commissioning, by increasing the information, data, evidence and technical support available to commissioners to develop more SIBs locally. We are working ever more closely  with businesses to support and enhance their socially responsible activity, with the particular priority of promoting employee volunteering in large companies.
My noble friend Lord Balfe mentioned charity accountability. Charities are publicly accountable through their annual accounts and trustees’ annual reports. These are publicly available on the Charity Commission’s website.
I turn to third-party campaigning, which was mentioned by several noble Lords, including the noble and right reverend Lord, Lord Harries, my noble friend Lord Balfe and the noble Baroness, Lady Scott. We need to strike a balance between the freedom to campaign and increased transparency of third-party campaigning during election periods. I think that we can all agree on the need for effective controls that limit the opportunity for groups to exert an undue or improper influence on government and help to make the political system more accountable. Lobbying plays an important role in ensuring that everyone’s voice is heard in Westminster, but lobbying must be transparent.
The Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014 is about giving the public more confidence in the way that third parties interact with the political system. Importantly, and quite rightly, the rules prevent any individual or organisation exerting undue influence on an election outcome. The Act was never intended to restrict the freedom to campaign by charities and other campaigners but instead to make the political system more accountable. Remaining above the party-political fray in all forms of communication is vital to maintaining public trust in charities and the important work that they do. Under charity law, charities have the right to undertake campaigning and political activity where it supports their charitable aim, where trustees consider it to be an effective use of charitable resources, and provided they do not engage in party politics.
I move on to the excellent and thought-provoking review done by my noble friend Lord Hodgson. The review clearly set out the need for regulation of third-party campaigning and recommended that some of the existing regulations be tightened—as my noble friend noted in his report, these recommendations interlock and are to be seen as a package. The report recommends some strengthening of the regulatory regime, such as clarifying the exclusion for supporters of the organisation and requiring campaigners to submit more detailed information to the Electoral Commission regarding their planned activities. My noble friend Lord Hodgson’s report is one of a number of reports that have been received following last year’s general election, including the Law Commission’s interim report and reports from the Electoral Commission with recommendations for change. It is obviously important that the Government consider all these reports carefully. I am sure that my honourable friend the Minister for the Constitution will pay close attention to the points raised in this debate as he considers the recommendations of my noble friend Lord Hodgson’s third-party campaigning review.
My noble friend wanted to know when the Government would respond to his report. I cannot make any promises but there are new Ministers in the post who will need  to carefully consider everything. I am sure that they would be very happy to meet my noble friend to discuss his report; I will ask the Minister for the Constitution to provide an update to him.
I turn to the regulation of lobbying activity, which I know excites a lot of noble Lords in this House. We will of course discuss this in greater detail tomorrow. It is obviously the regulation for the activity of businesses and private interests. The statutory registry of consultant lobbyists is designed to shine the light of transparency on those who seek to influence the Government. It complements the existing transparency regime whereby Ministers and Permanent Secretaries publish details of their meetings with external organisations. Before the lobbying register was established, it was not clear from diaries alone whose interests consultants were representing. The register requires people who are paid to lobby the Government on behalf of others publicly to disclose their clients. The register also has enhanced scrutiny on consultant lobbyists, who must declare whether they subscribe to a code of conduct. Our aim was to avoid unnecessary regulatory burdens, not to establish top-to-bottom regulation of all who lobby. That is why we set up an appropriate and pinpointed way to ensure high levels of transparency in the specific areas of the lobbying industry where they were needed.
We believe that a statutory register of consultant lobbyists is a proportionate and appropriate approach to the identified issue—that it is not always clear whose interests are being represented by consultant lobbyists. Calls for extending its scope would duplicate a transparency system already in place. The lobbying industry has welcomed the continuation of self-regulatory codes of conduct and, to date, 130 lobbying companies have registered with the registrar. We will be talking about this further tomorrow, so I am not going to go into huge detail now.
The noble Lord, Lord Haskel, and the noble and right reverend Lord, Lord Harries, brought up the proposed anti-lobbying clause in government grants. The Government are committed to ensuring that taxpayers’ funds are spent on improving people’s lives and good causes, rather than on improper lobbying for new regulation or for more government funding. As the noble Baroness, Lady Hayter, mentioned, the anti-lobbying clause in grant agreements was never targeted at charities. The voluntary sector, which includes charities, makes up less than 7% of all government grant recipients. The collaborative process we built into the development of the anti-lobbying clause has enabled us to understand further its impact on the many and varied recipients of government grants. That led to a decision to pause the implementation pending further consideration of the wording of the clause and its effects. We are continuing to work with departments, academics, research organisations and the voluntary sector to ensure the effective implementation of this policy. This is taking time and changes will be announced and communicated in due course.
The noble Baroness, Lady Hayter, mentioned the chilling effect. It was never the intention of the grants clause to stop charities providing independent, evidenced-based advice to government policy through either giving evidence to Select Committees, or meeting with  Ministers or officials to discuss the progress of taxpayer-funded grant schemes. The aim is to ensure that grant funding is used as intended.
The noble Baroness also mentioned that the grants clause stops charities from lobbying and from speaking out on behalf of beneficiaries. Restrictions in grant terms and conditions are not new. Existing terms and conditions limit the use of grants to activities set out in the grant agreement. Such restrictions do not stop charities from using other funding to support lobbying or political activity.
The noble Baroness, Lady Scott, also referred to the chilling effect. She said that charities were unsure about what compliance means in grants’ terms and conditions. It is robust, and mutually agreed that the grant agreements make clear to charities what delivery entails.
The noble Lord, Lord Lingfield, mentioned ineffective grant funding management. The Government are focused on improving its effectiveness and efficiency. This will ensure that we work more effectively with charities to deliver value to the taxpayer.
My noble friend Lord Balfe and the noble Baroness, Lady Hayter, mentioned trade unions. The Government recognise the role that trade unions have played and can play in developing the economy, maintaining positive industrial relations and supporting employers in upskilling their staff and in participating. However, we are determined that we must balance their rights with those of working people and businesses. They have their own right to expect that the services on which they rely are not going to be disrupted at short notice by strikes with the support of only a small proportion of union members.
Before I finish, I want to highlight the positive relationship between charities, wider civil society, trade unions and Government. The right reverend Prelate the Bishop of Derby mentioned this. Joined-up thinking is so important and the round-table discussions that he started in Derby are interesting. This is often the way forward. They get people together. It may not be with a specific charity, but it gets them thinking about how we might help people in their various neighbourhoods.
Looking to the past, there are many examples of where the Government have responded to the voice of the voluntary sector. I shall give just one. Towards the end of the last Parliament the Office for Civil Society launched a £20-million local sustainability fund. It came about as a direct response to concerns voiced by the sector—that small and medium charities were struggling more than many others to respond to the challenging operating environment. The noble Baroness, Lady Pitkeathley mentioned that charities are finding it difficult. The launch of this fund will certainly help particularly the medium and small charities. It is now helping more than 260 charities to reform and secure the future of their services. I am sure there will be many more such examples of collaboration between the Government and civil society in the future.
I look forward to debating and discussing with your Lordships what more can be done to continue our support of civil society in the months and years ahead. In a debate such as this, it has been almost impossible  to answer every point, but I assure all noble Lords who have spoken that I have made a note of what has been said and will take all these points back to the department. We will discuss and make sure that your voices are heard and I hope that we will have another debate where we continue the important work that has been mentioned today.

Baroness Hayter of Kentish Town: My Lords, I thank the Minister and all the speakers. I obviously regret that the response to the report from the noble Lord, Lord Hodgson, was not forthcoming. I look forward to hearing the outcome of the meeting and I hope that it might be transmitted to the whole of your Lordships’ House.
I also regret that the Government are only pausing the anti-advocacy clause. I think it was the noble Lord, Lord Black, who said that charities provide care and voice. That has been the overwhelming view of those who have spoken today. The front-line experience—that day-to-day contact that charities have—is essential to feed back into the legislative process, adding a voice that would not otherwise be heard. My noble friend Lord Chandos may be right when he says that the Government seem to want a silent society. It is no good saying that charities can find other funds for their policy and advocacy work. As my noble friend Lord Griffiths said, that is fine if you are running a charity looking after children, or indeed animals. It is very easy to raise money then. However, it is much more difficult if you are doing it for unpopular causes. Those of us involved in those areas are highly dependent on public funds and there is not necessarily other money available to look after those broader interests.
I should have declared my interest as a charity trustee and, indeed, as a proud member of the National Trust. If every organisation were as popular as that, we should all be very grateful. We have heard today about the extraordinary work being done by NOAH, Unionlearn, St John Ambulance, the Cat Protection League, Quick Reads, Carers and all sorts of organised charities, the stress on their potential for innovation and about the fruits of their experience that otherwise are not discovered. Therefore, I hope that the Minister’s final words about listening and taking back our comments to whichever department they concern will happen. I think that the right reverend Prelate the Bishop of Derby said that these charities are a precious part of our democratic ecology. To continue their work they need a relationship with the Government which is not where it is at the moment. At present, they feel that the Government want to tie them up in anti-advocacy clauses and prevent them lobbying. That surely is not good for any of us.
On behalf of the whole House, I add my thanks to my noble friend Lady Pitkeathley, the noble and right reverend Lord, Lord Harries, and the noble Lord, Lord Hodgson, who have taken on particular roles. We look forward to the future work of the Select Committee. Charities are much loved by this House. We hope that we can trust the Government to be a great help rather than a hindrance to them.
Motion agreed.

Grammar Schools
 - Statement

Lord Nash: My Lords, with the leave of the House, I will repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State for Education to an Urgent Question in the other place earlier today about grammar schools. The Statement is as follows.
“As the Prime Minister has said, this Government are committed to building a country that works for everyone, not just the privileged few, and we believe that every person should have the opportunity to fulfil their potential, no matter what their background or where they are from. Education is at the heart of this ambition. We inherited a system from the last Labour Government, however, where far too many children left school without the qualifications or skills they needed to be successful in life. Our far-reaching reforms over the last six years have changed this: strengthening school leadership; improving standards of behaviour in our classrooms; ensuring children are taught to read more effectively; and improving maths teaching in primary schools. As a result, there are now 1.4 million more pupils in schools rated as good or outstanding than in 2010. This means more young people are being given the opportunity to access better teaching and to maximise their potential. This is what we want for all children and we are continuing our reforms so that every child can have the best possible start in life. It is why we are doubling free childcare to 30 hours for working parents of three and four year-olds.
As I said in July on the issue of academic selection, I am open-minded because we cannot rule out anything that could help us to grow opportunity for all and give more people the chance to do well in life. The landscape for schools has changed hugely in the last 10, 20, 30 years—we now have a whole variety of educational offers available. There will be no return to the simplistic, binary choice of the past where schools separate children into winners and losers, successes or failures. This Government want to focus on the future, to build on our success since 2010 and to create a truly 21st-century schools system. We want a system that can cater for the talents and abilities of every single child. To achieve that, we need a truly diverse range of schools and specialisms. We need more good schools in more areas of the country responding to the needs of every child, regardless of their background.
We are looking at a range of options and I expect any new proposals to focus on what we can do to help everyone to go as far as their own individual talents and capacity for hard work will take them. Education policy to that end will be set in due course”.

Lord Watson of Invergowrie: My Lords, I thank the Minister for repeating the Statement although it must be said that it was rather vague and unconvincing. Indeed, anyone listening to the Secretary of State this morning would have been struck by just how unconvinced  she herself sounded when making it. The Minister will regard it as a backhanded compliment that his delivery was slightly better.
On the day that she assumed office, the Prime Minister announced that she would put social mobility at the heart of her agenda. That pledge was cast into doubt when she quickly abolished maintenance grants for students and any doubts were removed yesterday when she defended plans for new or expanded grammar schools. The Minister said that he was open-minded on the matter; the Prime Minister has already moved at least one step beyond that because whatever claims in support of grammar schools can be sustained, advancing social mobility is not one of them. I was surprised to hear the Minister tell your Lordships’ House yesterday that there is no clear evidence to support the views of the Chief Inspector of Schools, who said that the idea that poor children would benefit from the return of grammar schools was, “tosh and nonsense”. In fact, the Minister need look no further than Buckinghamshire or Kent to have Sir Michael Wilshaw’s opinion confirmed —an opinion, it might be said, that was supported yesterday by the Minister’s colleague and former Education Minister, the noble Lord, Lord Willetts.
In answer to a question following her Statement today, the Secretary of State said that the Government’s plans will not involve a return to secondary moderns. Well, perhaps not in name, but as that suggests that a considerable amount of policy development must have taken place already, will the Minister explain how the Government believe that a return to the entrenched inequality and social disadvantage of the 1950s and 1960s can be avoided? We fully understand why some parents are attracted to grammar schools and accept they want only what is best for their children, but to expand grammar schools by a non-legislative route at a time when school budgets are squeezed and teaching posts remain unfilled shows a skewed sense of priorities. Therefore, can the Minister give an assurance that newly created academies or free schools will not be used as a backdoor method of reintroducing selection into state-funded schools?

Lord Nash: I am grateful to the noble Lord for his compliment. I will take any compliment I get from him, backhanded or not. As I said yesterday, I am a great fan of Sir Michael Wilshaw. He has played a big part in improving our school system and I am delighted that he is in the Chamber today. I am fully aware that there are arguments on both sides of this debate. However, we do not want this to be a dogmatic, ideological debate. Just because things may not have worked well in the past does not mean that we cannot find ways of making them work in the future for all pupils. We will make any changes against a background of ensuring that we improve the system for all pupils and against our drive for social mobility. However, we need more good and outstanding school places and we want all schools in the system that are good and outstanding to help us to do that. As I say, we have not made a policy announcement but I am sure there will be further Statements in due course.

Lord Paddick: My Lords, it has been reported that the Prime Minister wants a new generation of inclusive grammar schools and yet selection at age 11,  which the grammar school implies, excludes those who fail the selection test. Many young people do not reach their full potential until they are in their teens. To write them off at the age of 11 would deny them the opportunity to succeed. Why do the Government not concentrate on the Liberal Democrat achievements in the coalition, not just free early years education but also the pupil premium for disadvantaged youngsters and free school meals—measures that will deliver a truly inclusive educational system?

Lord Nash: I entirely agree that the coalition Government’s policy on pupil premium has been a clear success. We want an inclusive system. As I said yesterday, one of the ways that we think grammar schools can help improve their intake of pupils on free school meals, which I accept is very low, is by taking responsibility for some of their feeder primaries so they have a vested interest in them and can improve the performance of many more pupils on free school meals at an early age so that they can go to those schools. I take the point about the cut-off age of 11 and whether pupils cannot move at a later date. I assure the noble Lord that that is something we will consider and are looking at.

Baroness Watkins of Tavistock: My Lords, I start by declaring my interest as a former chair of two academy schools—one of which involved seven pupil referral units—and as the mother of a daughter who is a teacher in an outstanding academy school in London. Can the Minister tell me whether any review will include an examination of the availability of pupil referral unit places in England? Many pupils are either excluded from school while awaiting a place, or remain in mainstream schools—at a disadvantage to themselves as individuals, while also often providing a challenge to the effective learning of other students in their classes. The most disadvantaged and needy should have equal rights to having their potential fulfilled. I firmly believe that, if we consider reintroducing selective schooling, we will need to look at both ends of the spectrum, because I am certain that grammar schools would not keep such pupils if they had problems.

Lord Nash: I entirely agree with the noble Baroness about alternative provision and PRUs. We have in fact created many more alternative provision free schools. There are some excellent examples in London—for example the TBAP free school in Fulham— and we are looking more closely at this area to improve alternative provision. We are also keen to make sure that provision for pupils with SEN and behavioural difficulties in all schools and academies can be well accommodated.

Lord Lucas: My Lords, we have a policy which we fought extremely hard for—that every child has a right to an academic education. We need a very high proportion of our pupils to be academically excellent. How on earth does a grammar school policy fit with that?

Lord Nash: We have had a very strong drive over the last six years of improving academic quality in the curriculum. I reminded the House recently that sadly, in 2010, only one in five pupils in state schools was  studying a core suite of academic subjects—something that would be regarded as basic fare in most successful education jurisdictions and in any independent school. Through EBacc we doubled the number of pupils doing this. We are determined to see many more pupils doing the EBacc and doing a core suite of academic subjects. It gives disadvantaged pupils in particular the cultural capital they need, as they do not get that at home. We have been very focused on improving the academic achievement of all our pupils.

Lord Grocott: My Lords, however carefully the Statement is worded, will the Minister acknowledge that if you select young children at 11, there is no way of avoiding the fact that up to 80% of the children in the area will be labelled at that age as having failed. I know people who took the 11-plus 60 years ago who today, not far below the surface, feel bitter and hurt by what happened to them half a century previously. In one case three passed and one failed; you can imagine the effect of that in a family. How on earth can he introduce a policy of this sort that does not include those insuperable disadvantages?

Lord Nash: We do not wish to go back to the past. We want a modern policy for the future. We shall be consulting widely on anything we come up with and we believe many of these issues may be overcomable and may result in an improvement across the board in our school standards.

Lord Sutherland of Houndwood: My Lords, does the Minister agree that progress over the last few years in schools—and there has been significant progress—has owed nothing to the argument about whether we should have grammar schools? That is a political argument, which unfortunately some on each side would like to resurrect. The issue is excellence in schools. There is already selection; setting takes place in schools. There are schools already within the system which can select on the basis of special aptitude—for example the King’s College specialist school in mathematics, where there is no point attending unless you have particular ability in mathematics. Selection can take place, but there has to be a rationale for it that is not political.

Lord Nash: The noble Lord, as always, makes a good point and he is, as we know, very experienced in this area. We want to harness the excellent ability of all schools to improve the performance of a school. He is quite right that there is selection in schools. Many schools are now setting; I know the chief inspector believes strongly in setting, and I have seen much evidence that parents support that kind of selection in schools.

NHS: Health and Social Care Act 2012
 - Motion to Take Note

Moved by Viscount Hanworth
That this House takes note of the impact of the Health and Social Care Act 2012 on the current performance of the National Health Service and its future sustainability.

Viscount Hanworth: My Lords, the very existence of the NHS is in danger, as is the principle of a universal healthcare provision free at the point of delivery. The NHS is being turned into a market-based system. The proponents of these changes envisage that the system will be financed by private insurance policies that will allow individual policyholders to determine the extent of their insurance cover and the level of care to which they will be entitled. The services will be provided by commercial organisations under the rubric of the NHS. Many of them will be displaying the familiar NHS logo in a deceptive manner. These changes have been proceeding gradually for the past 25 years, but they have been accelerating under the coalition Government and under the succeeding Conservative Government.
Notwithstanding the rubric of this debate, which will be concerned mainly with the developments since the passing of the Health and Social Care Act 2012, I shall begin by recounting the slow and inexorable process by which the original intentions of the NHS have been subverted. It will be helpful to understand how the NHS has been brought to a state where it has become easy prey to the provisions of the 2012 Act. The NHS, at its inception in 1948, was an egalitarian system. In the alliterative words of one commentator, it was envisaged that “judges and janitors” would occupy adjacent hospital beds. The NHS was to be funded by taxation, and no one was to be charged for its services.
The 1948 Act took hospitals into public ownership, but it left GP surgeries in private ownership and seemingly allowed GPs the dignity of continuing to be self-employed. Indeed, many of these surgeries were located in the private residences of the practitioners. Latterly, group practices in dedicated buildings have become the norm; and most doctors are now virtually salaried employees of the state. However, the enduring private ownership of surgeries has allowed them increasingly to fall into the hands of commercial enterprises.
It has been said that the intentions of the Conservative Party to privatise the NHS have been hidden in full view of the rest of us, and it is a wonder that they have so often and for so long escaped our notice. A statement of these intentions was contained in a Conservative policy document of 1988, authored jointly by Oliver Letwin and John Redwood and titled Britain’s Biggest Enterprise: Ideas for Radical Reform of the NHS. Others have drawn attention to this text. The polemic of these authors centred on their unjustifiable claims of administrative inefficiency in the NHS. Their pamphlet also inveighed against the supposed discomfort of the service, which it likened to that of a prison.
The authors were irked by the absence of such modern facilities as private telephones and television sets which, in their opinion, should be available to all those who cared to pay for them. They appeared to dislike the prospect of rubbing shoulders with the masses. To them, the prospect of being placed in a queue was a clear indication of the dysfunctional nature of the system. Their prescription for eliminating queues was to establish a market mechanism which would ration medical services by pricing them.
A minimum list of the measures proposed that should be taken in reforming the NHS may be enumerated as follows: first, the establishment of the NHS as an independent trust; secondly, increased use of joint ventures between the NHS and the private sector; thirdly, extending the principle of charging; fourthly, a system of health credits to be supplemented, if so desired, by the patients; and, fifthly, a national health insurance scheme.
In a telling admission, the authors acknowledged that these reforms could not be achieved in a single step, for the reason that the public would find them unacceptable. Therefore, they accepted that the agenda would have to be fulfilled gradually and in stages. True to this agenda, the current Health Secretary, Jeremy Hunt, is on record for having called for the direct funding of the NHS to be replaced by an insurance system. I would like to suggest that this agenda has been firmly in the minds of the Conservative policymakers from that day to the present. It is on account of its cunning concealment as much as its gradual realisation that many of us have failed to recognise what has been afoot.
The story goes back further in time. The process of reform—that is, the process of turning the NHS into a business—began in a modest way in 1983 under Margaret Thatcher, when she commissioned the so-called Griffiths report, which led to the introduction of a body of managers into a system previously run by clinical professionals. It was not until January 1989 that Thatcher announced a major review of the NHS, which aimed, so she said, to extend patient choice and to delegate responsibility to where the services were provided. These have continued to be the misleading mantras of most of the Conservative reorganisations.
The resulting National Health Service and Community Care Act 1990 created GP fundholding in order to promote a quasi-market within the National Health Service. The subsequent Health Authorities Act 1995 abolished the 14 regional health authorities, which were replaced by eight regional offices of a newly established NHS Executive. Here, we see another theme of the Conservative reorganisations, which claim to promote decentralisation but which actually accomplish the reverse.
There were indications that the incoming Labour Administration of 1997 would reverse some of these reforms. Thus, in 1997-98, GP fundholding was abolished by the Labour Government. However, Labour soon took over from where the Conservatives had left off. In 2001, primary care trusts were established. In 2002, NHS foundation trusts were announced by the Health Secretary, Alan Milburn, and they were established via the health and social care Act of 2003. These trusts were centred on large hospitals, which were to be given a degree of independence from the Department of Health and from the strategic health authorities, and which were to have a degree of financial autonomy. At the same time, an extensive outsourcing of ancillary services was encouraged.
That autonomy enabled the trusts to pursue private finance initiatives, or PFIs, whereby a massive investment in the NHS was achieved under the Labour Administration. The PFIs have bequeathed a crippling  legacy of debt to the NHS. Many hospital trusts have been bled dry by contracts that are demanding exorbitant rates of return for periods of as much as 30 years. A typical hospital refurbishment costing perhaps £9 million will eventually yield the private contactor as much as £80 million, and it is estimated that the NHS is currently paying £2 billion a year in PFI-related costs. Much of this income is going offshore in avoidance of taxes. Of course, one of the purposes of PFI was to shift the cost of big projects out of government borrowing figures. The fallacy of that approach to social investment should now be clear to anyone.
In the campaign that led to the election of 2010 and to the formation of a coalition Government, David Cameron asserted that the NHS would be safe in the hands of the Conservatives and that there would be no further top-down reorganisations. These were flagrant deceptions. Within a short period, the Secretary of State for Health embarked on the preparation of a major piece of legislation, which was to become the Health and Social Care Act 2012.
Perhaps that was par for the course. As Professor Turnberg—my noble friend Lord Turnberg—remarked in a speech in February this year, there have been eight reorganisations of the NHS in the 16 years that he has been in the Lords; that is, one every two years. However, as the NHS England chief executive, David Nicholson, famously said in a speech to the NHS Alliance conference, the reforms demanded such a big reorganisation that “you could probably see it from space”.
The Bill was a huge document, but we may remind ourselves of its salient points. To begin with, the leading clause has been widely interpreted as relieving the Secretary of State of the duty to provide a universal and comprehensive health service in England. That duty has devolved on to the newly created NHS England health executive. This interpretation of the clause is debatable. Nevertheless, it has allowed the current Secretary of State to criticise the NHS when things have gone wrong, instead of taking the blame himself.
Under the 2012 Act, NHS hospitals are allowed to make up to 49% of their money from private patients. Presumably, this allowance was intended as a means of alleviating the financial problems of the hospitals. The Act abolished the primary care trusts and the regional health authorities, and replaced them with clinical commissioning groups, or CCGs, which now control a large proportion of the NHS budget and commission local services.
The Act proposed that general practitioners and other health professionals should be given the responsibility for commissioning the majority of health services. However, that is not what has happened; nor does it seem to have been what was truly intended. The CCGs are told what they can and cannot do by the bureaucrats of NHS England, which is the newly styled NHS Executive, and by its secretive local area teams. They have imposed stringent controls on what can be provided, and those controls have become increasingly restrictive in consequence of the financial exigencies of the NHS. Notwithstanding the centralised and hierarchical control that it has imposed, this reorganisation has created a so-called postcode lottery in the provision of services, of which the availability now varies widely across the regions.
The clinicians are typically represented on the CCGs by a small handful of GPs from the largest and most prosperous practices. Smaller practices working under increased pressure cannot afford the necessary time to be involved. In 2013, the British Medical Journal used the Freedom of Information Act to discover that more than a third of the GPs on CCGs have conflicts of interest due to directorships or shares held in private companies. Much of the work of the CCGs is already being undertaken by commissioning support units, which were due to be outsourced to commercial companies in 2016.
Perhaps one of the most significant provisions of the Health and Social Care Act is to be found in Section 75, which has established the requirement for competitive tendering for the provision of services. It is extraordinary that commercial interests, represented by commissioning support units, should have become, in some instances, both providers of health services and the providers of advice on commissioning.
The requirement for tendering has imposed a huge administrative burden on the NHS, which is entailed in the commissioning, invoicing and billing of these services. This is wasting money and it is wasting the time of already overburdened clinicians. It is also seriously undermining the provision of services. The introduction of commercial profit-seeking providers means that services may be pared to the bone.
Private clinics are now competing with hospitals to conduct routine surgery on the understanding that, if complications arise, NHS hospitals will be obliged to provide the remedy. Hospitals can be financially unsettled when cheap and easy functions are subtracted in this manner. Also, if they are teaching hospitals, the experience of routine operations is denied to trainee doctors.
There have also been significant commercial inroads into general practice, where there is now a serious shortfall in the number of GPs. The response of NHS England to the resignations and retirements of the members of a group practice has been to put the services out to tender under a so-called APMS contract, with a limited five-year term. Such contracts are liable to be taken by commercial enterprises motivated by profit and intent on saving costs. The short-term nature of the contracts discourages investment, and the cost-saving motive results in inadequate levels of staffing, with peripatetic locum doctors in place of resident GPs. The costs and risks of tendering mean that independent GPs will struggle to compete with larger healthcare corporations.
Why are politicians of all parties and senior civil servants so attracted to the prospect of the commercial provision of health services? In answer to this, I should observe that many of them have strong affiliations to private health that often entail pecuniary interests. Simon Stevens, the current chief executive officer of NHS England, spent 10 years as a senior executive in UnitedHealthcare, which is the biggest multinational healthcare corporation in the United States. I should also observe that, with Andy Burnham as a notable exception, the majority of former Secretaries of State for Health have financial interests in commercial healthcare.
The conditions are now in place for a wholescale takeover of the NHS by commercial enterprises. In spite of numerous withdrawals of the private sector due to unprofitability attributed to the exigencies of the NHS finances, and in spite of some outstanding cases of fraud and malfeasance among private providers, it appears that the proportion of the NHS budget devoted to purchasing from private providers is increasing apace. Some commercial enterprises, such as Serco and UnitedHealthcare, have pulled out of providing medical services to patients, leaving behind them a wake of disorganisation. The overstretched NHS has had to pick up the pieces. Nevertheless, the accounts provided by the Department of Health in July of this year have shown that 7.3% of total NHS expenditure in 2014-15 went to private providers, which represents an increase of 1.2% over the previous year. This is the biggest annual rise in both absolute and percentage terms since 2006.
Meanwhile, so-called sustainability and transformation plans are being demanded from local NHS areas by NHS England. These are aimed at saving large sums of money, while improving the quality of healthcare. It has become abundantly clear that such plans amount to dangerous fallacies. They have already been widely discredited. They would lead to widespread closures and amalgamations of hospitals, and they would be strip the NHS bare. I beg to move.

Lord Lansley: My Lords, I am sure that we are grateful to the noble Viscount for initiating the debate. I hope that the debate will be more directed towards the future of the National Health Service, its sustainability and how it can achieve improving quality. I do not, therefore, propose to examine in detail the many assertions made in the noble Viscount’s speech, but I put on record that I think there were many errors in what he had to say about the past.
On one particular point, from my personal point of view, I will just say this. As the Conservative Party’s lead spokesman on health for more than nine years, I am proud that, with David Cameron’s active support, we made it very clear that we would not at any point countenance a shift away from the NHS as a comprehensive, universal service, available free at the point of use and funded out of general taxation. I am also proud that, in the midst of the financial imperatives that we faced in 2010, he and I, together with our Liberal Democrat colleagues in coalition, gave the NHS the priority that it needed and increased its budget in real terms through the last Parliament.
What did the Health and Social Care Act set out to do? It was and has been a structural change. It was founded on a set of principles that were not new to the National Health Service at all. Over the preceding 20 years, pretty much every Secretary of State agreed, with the exception of Frank Dobson—the noble Viscount in his speech was at least even-handed in condemning past Labour Governments and coalitions as well as the Conservative Party—that we needed to devolve responsibility within the National Health Service, to give greater freedoms to providers to promote patient choice and indeed to be very clear about the distinction  between the commissioning function and the provider function. I make no bones about the fact that it is designed to create a stronger commissioning structure. Where I agree with the noble Viscount is that that is as yet an unfinished task.
There is a constant pressure within the National Health Service for the providers to control the structure of activity and for commissioners, not independently, to use their budgetary and statutory powers to determine what is in the best interests of patients. That actually is what is in the Bill. It does not say that there has to be compulsory competitive tendering. It does not tell the commissioners how they should go about it in terms of the use or otherwise of competition. What it says is that they have to use their powers in order to deliver what is in the best interests of patients, and if there is something that does not involve competition, they are entirely at liberty under the statute to do exactly that.
Secondly, what did the Health and Social Care Act not do? It did not introduce competition. There is a reason why the noble Viscount referred to 2006 as the starting point for his analysis of private sector activity on outsourcing in the National Health Service. It was in 2006 that the previous Labour Government introduced it. PFI is the largest element of privatisation, and there is nothing in the 2012 Act that requires any extension of privatisation. On the contrary, it did away with the past Labour Government’s ability under the law to discriminate in favour of the private sector. There is no potential to do that. The only reason why any commissioner should use the private sector is because it would provide a better service and at a lower cost. Actually, we shifted the structure of “any qualified provider”—which is not in the Act—from a cost basis to a quality basis; it has to provide a better quality and they are on the same tariffs.
What the Act also did not do is create deficits in the National Health Service. I am proud of the fact that, in the three years during which I was responsible for the financial situation in the National Health Service, it was in surplus all that time and, indeed, not on a declining trend. The number of trusts in deficit in 2013-14 was proportionately the same as in 2009-10. There are subsequent reasons why the NHS has shifted into financial deficit. It is partly to do with the Francis report, which came after I ceased to be Secretary of State. It is not that it was not a good report, but the response to it focused on the extension of staffing and measuring staffing, with the consequent impact on agency costs not least, rather than a focus on outcomes. I am proud of the fact that the outcomes framework for the National Health Service and a focus on quality and outcomes were at the heart of the reform process—and should be, and often still is not. Too often, the debate about the National Health Service is completely obsessed with inputs and activity levels, and far too little focused on outcomes. We have an outcomes framework and we should focus on it.
What do we need to do in the future? We should not, in my view, revert to monopoly. Sustainability and transformation plans, while they are rightly the product of collective and collaborative working, should not attempt to create monopolistic structures in the NHS because a monopoly in the NHS would do  exactly the same thing as it does anywhere, which is to pretend, through offering short-term benefits, to provide long-term benefits but actually to entrench provider interests as opposed to the patient interests. We should not restrict choice and we should not end clinical commissioning. We should not allow the commissioning function and the provider function to be submerged into one organisation; they are distinct and separate, and the conflict of role between those two should not be confused. As to sustainability and transformation plans, we should not allow them to become what they were back in 2006, when there were substantial deficits, albeit at a time of rising resources. We should not allow them to be an effort to try to constrain demand by restricting supply, which is what tended to happen back in those days.
What we need is more integration, and the Act led, through health and well-being boards and the role of local government and its ancillary additional functions on public health, to a real opportunity for greater integration. The commissioning function should involve local government and the NHS very much working together. One of the principal reasons for the deficits is the lack of reform in social care, and we should implement Dilnot. As I have said in this House, there were reasons why it was not done, which I do not accept. It should have been done, it still must be done and it should form part of an input to social care.
Finally, we must acknowledge the necessity for the NHS to have the resources it needs for the future. Time does not permit me to explain all that, but we never would have anticipated in 2010 that we would go for a full decade with a less than 1% real-terms increase year by year. We have to accept that the sustainability of the NHS requires resources for the NHS and for social care on a scale that is not presently anticipated in the current spending review.

Baroness Tyler of Enfield: My Lords, I congratulate the noble Viscount, Lord Hanworth, on securing this vital debate. The starting point for our debate is the impact of the 2012 Act—legislation which is etched on the memory of many in this Chamber, and I suspect none more so than the noble Lord, Lord Lansley, who has just spoken. It was the first Bill I was actively involved in after joining this Chamber and, my goodness me, it felt like a baptism of fire. It is fair to say that it was highly charged and contentious piece of legislation. However, rather than rehearse the heated arguments again, today I will focus primarily on how the system has responded to the changes and what it means for the future.
We probably all agree that there is no appetite for further structural reform, and I doubt whether there will be in the years ahead. Therefore, the current immense problems of sustainability will need to be resolved within the current architecture. This will require huge ingenuity, creativity, cultural and behavioural change, and transformed styles of leadership at both national and local level, along with very different financial incentives.
As we have heard, the 2012 Act introduced major structural changes—I am not going to run through them again—but how has the system responded to  these changes in the face of huge financial and operational pressures? To answer that question it is important to highlight some key factors. First, whatever their rights and wrongs, the geography of clinical commissioning groups is not strategic. Simply put, there are considerably more CCGs—some 209—than there are hospitals, of which there are just over 150. That is not helpful. Such fragmentation militates against strategic planning and decision-making.
Secondly, the more market-based system that competition and the introduction of foundation trusts by successive Governments heralded may have been okay during times of plenty, but during a period of unprecedented austerity, coupled with a major growth in demand, it has proved much harder to sustain. Each trust fights hard to protect its own position, making collaborative working and the significant shifting of resources much harder.
Thirdly, in practice it has proved very hard for GPs to undertake the role envisaged for them of fundamentally reshaping the services provided by hospitals for the benefit of their patients. Too often they have been overwhelmed by rising demand, making effective collaboration between GPs and hospital consultants, which can be hard at the best of times, a distant dream.
The simple truth is that there is not enough money in the system to do all the things being asked of the health and social care system at a time of rapidly rising demand from a growing and ageing population—and that is before we come to the newest policy goal of seven-day working. We would all like to see that in an ideal world, but it must be properly resourced and planned if it is ever to become a reality. The current approach of trying to ram it through on resources that are not really adequate for five-day working, let alone seven, is clearly not viable.
There has been no shortage of recent reports demonstrating the parlous state of NHS finances. Reports from NHS Improvement, the King’s Fund, Nuffield Trust, the Public Accounts Committee and others have all shown rapidly declining financial performance and an alarming scale of deficits. In short, the NHS ended 2015-16 with an aggregate deficit of some £1.85 billion—a threefold increase on the previous year and the largest deficit in NHS history.
It is not at all clear how the £22 billion funding shortfall by 2020 will be achieved. When resources and demand are so out of kilter, what is urgently needed is a system-wide response, with system-wide thinking at its very core. This means putting far greater emphasis on geography—or place-shaping, as it is sometimes called—and, in essence, thinking in terms of local health economies rather than in terms of individual institutions or bricks and mortar. That system-wide thinking needs to be based on trust, collaboration, innovation and sophisticated networking—in short, the key ingredients of a joined-up response.
In fairness, the Five Year Forward View—widely regarded as an excellent document setting out a long-term vision—coupled with the planning guidance are both attempting to do just that. We have recently had the introduction of the five-year sustainability and transformation plan, which highlights the need for systemic leadership and a truly place-based plan, with  local leaders, including from local government, coming together and developing a shared vision of what will work best for the local community.
This is a welcome shift in emphasis towards collaboration rather than competition in the way NHS services are planned, even if it is being done somewhat by stealth. It also provides a much-needed opportunity to plan for a health service focused far more on people living in the community with long-term conditions rather than on treating illness in hospitals.
The country is divided into 44 sustainability and transformation footprints, as they are being called. Getting the geography right is essential, and they should have the strategic scale to look at major reconfigurations of services, including shifting resources from the acute sector into primary care, community care and, critically, social care—something that the smaller CCGs clearly struggle to do.
The approach feels right if the focus can be on far greater integration, collaboration and system-wide thinking. It is a real concern that the general mood music around these plans, due to be published in October, is negative at the moment. We have had reports of excessive secrecy, lack of local engagement and a strong emphasis on preventing immediate financial collapse at the expense of proper long-term thinking and planning towards long-term sustainability.
A recent statement from the chief executive of the King’s Fund, commenting on the plans, was blunt. He said:
“Almost all the additional funding provided by the government this year is being used to reduce deficits in acute hospitals, leaving little if any to invest in services outside hospital. Sustainability and transformation plans will not be credible unless they demonstrate how money and staff for these services will be found”.
Similarly, a recent Nuffield Trust report concluded the same thing. It had in it the memorable phrase that we would have to “preserve the NHS in aspic”—meaning having to halt any further advancement in healthcare quality and new treatment.
The final sentence of that report reads:
“The political acceptability of that—following a Brexit campaign which highlighted a potential £350 million for the NHS a week—is highly questionable”.
That is putting it mildly. We must have an honest debate which recognises that the service transformation needed for a health service fit for the future will take much longer than one Parliament, must be properly resourced, even if that means raising extra taxation, and, critically, have the financial incentives which encourage and reward collaboration and system-wide thinking. Otherwise we will simply limp from one crisis to another, and that is to no one’s benefit.

Baroness Armstrong of Hill Top: My Lords, it is a pleasure to be involved in today’s debate, although it is a troubling area of policy. The Minister has heard me on this before. The introduction of this legislation and the way that things have gone have not been a happy tale for the National Health Service—and, most importantly, for too many patients who look to the National Health Service and rely on it.
We know that one of the biggest challenges facing the NHS is the change in the nature of the population. Those changes in the population, and therefore the patient profile, were not addressed in this legislation, which was about structures. I am the last person to say that structures do not matter, but in the National Health Service people work with what they are given. They have to spend so much time trying to sort out what the legislation means in terms of structures and who is responsible for this, that and the other that they have not been tackling the issues that really affect patient care.
I am concerned particularly, as the Minister will not be surprised to hear, about the integration of the different sectors—the integration of the National Health Service with social care—which is one of the real priorities at the moment. They are two totally different systems and the changes in the Act have not enabled and helped those two systems to work more closely together. It is a real problem. There are many other problems but I am leaving it to other people to talk about them. I will concentrate on this issue.
What has happened is that there has been a greater concentration on trying to sort out hospital provision, and subsequent government policies have added to the total inability properly to deal with social care. It is social care that is absolutely critical to hospitals in terms of bed blocking, but also to the most vulnerable: the elderly and people with disabilities. Their voice is not as loud as other people’s in the system—it would not be, for obvious reasons—and their ability to have choice and quality of care differs hugely across this country.
I could weep over the Government not having worked more effectively across government on this issue. The idea that 40% cuts in local government—when so much of local government money is spent either on the elderly or on children—would not affect social care and not have consequent effects on the NHS, and not to have worked that out before the Government initiated certain policies, is risible.
As I uncovered in written PQs, the position is particularly difficult in the north-east—I suspect the Minister knows what I am going to say. I applaud the Prime Minister’s ambition that no area should feel left behind and that no individuals should feel that they do not have an equal opportunity to prosper. But look at what has happened and what is happening in the north-east. The actions that the Government have taken have exacerbated the problems and not eased them.
Poverty affects health. We should not need to say it but we still need to. The incredible reports from Marmot and so on show us just how much they affect health. In the north-east we have many more people who do not have the financial means to assist their own healthcare, so we have a much higher proportion of the population who are dependent on public subsidy in social care. As the Minister knows, I uncovered through these Parliamentary Questions that we have the highest proportion of people who are reliant on public funding for their care needs and the lowest ability to raise money in council tax because of the low value of housing.
The Government took a decision that one of the main ways of further funding social care would be through a 2% levy. When that happened, not a single authority in the north-east gained sufficient money from the 2% levy even to meet the rise in the minimum wage that the Chancellor announced on the same day. Whereas some authorities—I am told—have as a little as 1%, 2% or 3% of their social care users who are reliant on public funds, in South Tyneside, as one example, 89% of those who are dependent on social care rely on public funding. That authority got some £794,000 from the 2% increase and it nowhere near covered the costs in the social care sector of the minimum wage.
There is also, as the Minister knows, a crisis in the private sector providers of residential social care because they are not getting enough money. The Government have made a small attempt to alleviate that. But I am saying to the Minister that he really has to persuade his colleagues that if they want to get anywhere near meeting the Prime Minister’s ambitions, there has to be an urgent national review of how they fund social care and not to push it on to impoverished people in local authorities that have taken the cuts and do not have the council tax base that other parts of the country do. This is unfair, it is unequal and it has to change.

Lord Kakkar: My Lords, I join in thanking the noble Viscount, Lord Hanworth, for having secured this important debate and in so doing declare my own interests as chairman of University College London Partners, professor of surgery at University College London and a member of your Lordships’ House ad hoc Select Committee for this Session on NHS sustainability.
We have heard that the Health and Social Care Act 2012 introduced new structures and new organisations to assist in both the commissioning and the delivery of healthcare, but it also put on the Secretary of State for Health, for the first time, new duties with regard to research, education and training in the National Health Service. The research function is vitally important because it is with research and innovation that we are able to develop the novel therapies and technologies that will over time transform healthcare. The duty of the Secretary of State to ensure that this is promoted throughout the restructured National Health Service—ensuring that both hospital trusts, primary care and all the other arm’s-length bodies were sensitive to this requirement—is vital. The adoption of innovation will provide the opportunities as we move forward for more precision medicine and, as a result of that, to ensure that personalised medicine will transform the prospects for our fellow citizens and hopefully drive improved clinical outcomes delivered more effectively and efficiently throughout the entire NHS.
Can the Minister say what assessment has been made, since the passage of the Act, with regard to this duty of the Secretary of State? Has the NHS as a whole become more effective and efficient at delivering the research agenda? Has the performance of organisations within the NHS with regard to clinical research improved? As a result of increased research activity, have we seen  greater adoption of innovation throughout the system? Are we able to demonstrate that the adoption of innovation at scale and pace, through a variety of health economies, is providing clinical outcomes for patients availing themselves of NHS facilities?
Beyond the question of research, there is the question of education and training, and once again new arm’s-length bodies, by way of Health Education England, were established as part of the Act. There was also a duty placed on the Secretary of State for Health to ensure that education was promoted and that we developed a workforce fit for purpose, recognising over time that the changing demographics of the national population availing themselves of NHS services and the change in the nature of disease that the NHS would have to deal with, with more chronic disease, would require a much more flexible workforce. We need the ability for those committing themselves to a professional career as healthcare professionals to be provided with the opportunities not only to establish themselves at the beginning of their careers but also to adapt and change over time to ensure that they could address the changing needs of our fellow citizens and the NHS itself.
How successful has Health Education been in achieving those objectives? These were important new obligations and duties on the Secretary of State that provided excellent opportunities to transform the workforce to ensure that it was better able to deliver the changing needs of the NHS.
As part of the discussion during the passage of the Bill, there was much emphasis on ensuring early post-legislative scrutiny of the legislation to ensure that these important objectives were established. I know that in 2014 the Department of Health did undertake some post-legislative scrutiny. The outcome of that demonstrated that the principal provisions of the Act had indeed been established, but beyond that what has been achieved by way of the anticipated outcomes in those two important areas?
We have also heard in this important debate about integrated care and how so much of the purpose of the original Act was to ensure that integrated care could be delivered. This is a vital objective. The fact we will see the need to manage so much more chronic disease over time in the National Health Service demands a different approach to the delivery of care, focused no longer on the boundaries of individual institutions but on understanding the pathways that the large numbers of patients with chronic disease will have to follow—pathways that will require interaction with the hospital sector and with highly specialist centres at some times during their disease’s natural history but predominantly in the community.
One of the concerns raised during the Bill’s passage through your Lordships’ House was whether the bodies charged with regulation of the healthcare system were in a position to determine the quality outcomes achieved through true integrated care, rather than care delivered in institutions. I ask the Minister what assessment the Department of Health has made of the ability of the Care Quality Commission and NHS Improvement to assess outcomes of integrated care packages delivered across hospital and community boundaries, and their  performance in terms of their clinical effectiveness and their value to the health economy across those institutional boundaries. As we move to greater integrated care, it is vital that we understand that the systems we currently have in place are adapting themselves to ensure they can assess how quality and efficiency are delivered beyond institutions and in such a way that the investment of valuable healthcare resources in new models of care always delivers the very best for our patients.
We have also heard in this important debate about the vital need to explore further the link between healthcare and social care. Sir Cyril Chantler, a distinguished clinician, in a letter to the Daily Telegraph last month reflected on the fact that in the United Kingdom—in England—it is easy to get into hospital and very difficult to get out. One of the best performing countries for healthcare in Europe is the Netherlands, where it is very difficult to get into hospital because there is such an emphasis on well-integrated care in the community prior to the hospital stage that they save a huge amount of resource by keeping patients in the community.
In assessing the impact of the Health and Social Care Act and the opportunities avoided by it, what has been demonstrated to date is the need to improve the collective and integrated nature of care in the community prior to hospital admission to ensure they might be best managed in the community, rather than admitted to institutions.

Lord Colwyn: My Lords, I declare my interest as a retired dental surgeon and a fellow of the British Dental Association. I thank the noble Viscount, Lord Hanworth, for securing this debate. Although I shall need to read his speech in Hansard to make full sense of it, he gives me time to make a brief intervention to remind noble Lords of the importance to the long-term sustainability of the NHS of improving the nation’s oral health and ensuring good dental care.
We were reminded of this very starkly earlier this week when the front page of the Times and other newspapers reported the results of the research carried out by the British Dental Association, showing that 600,000 people a year seek help with toothache from their doctors—their general medical practitioners—who are neither qualified nor set up to deal with dental issues. This puts unnecessary pressure on the system, costing the NHS at least £26 million a year and wasting GPs’ time, resulting in longer waits for people whom they can really help.
People are seeking a free GP appointment instead of going to see a dentist because of the chronic underfunding of NHS dentistry and constantly increasing dental patient charges. The fees for NHS dental treatment continue to rise much faster than inflation and people’s earnings, having gone up by 5% this year and increasing by a further 5% next year. I have been arguing that this unprecedented increase will discourage patients who most need to see the dentist from going to see one, but this latest research clearly shows that it also puts an avoidable burden on the rest of the already-strained NHS.
While NHS care is supposed to be free at the point of use, this latest increase means patients now cover 26% of their NHS dentistry costs—up by more than a third compared with a decade ago. If this trend continues it will take just 15 years before patients pay for most of their treatment. This is set against the backdrop of £170 million of NHS dentistry funding having been cut by the Government since 2010, with patient charges increasingly used to make up the shortfall.
Neglecting oral health puts pressure on not only our general practitioners but our hospitals. The number of people going to A&E with emergency dental problems has been rising sharply and tens of thousands of people continue to be admitted for scheduled tooth extractions. It is frankly a scandal that tooth extractions under general anaesthesia remain the number one reason for hospital admissions in young children, with 160 youngsters and their parents going through this painful and stressful procedure, which is not without its risks, every day. The cost of these completely preventable treatments has gone up by more than 60% in the past four years and now stands at £35 million a year. Again, it is the kind of avoidable pressure our struggling hospitals could really do without. We simply cannot continue to treat oral health as separate and inferior to other areas of health, neglecting prevention and reducing NHS dentistry funding while topping it up with inflated patient charges. It is not only bad for people’s dental and general health; it is also a false economy that puts unnecessary strain on our GPs and hospitals. It is an important part of our health service which we must not overlook when discussing the long-term sustainability of the NHS.

Lord Rea: My Lords, I thank my noble friend Lord Hanworth for bringing this important topic forward.
Before the 2010 election David Cameron specifically ruled out “a disruptive top-down reorganisation”, but this is what the Act has proved to be. It was also largely unnecessary: many of the changes brought about by the Act, particularly the beneficial ones—and, yes, there are quite a few—could have been achieved without new primary legislation. In my seven minutes, I will concentrate on public health and prevention, which is where my current involvement with health lies.
Twenty-three years after retiring from NHS clinical practice, I declare an interest as honorary president of the UK Health Forum, an independent but publicly funded body representing some 60 national organisations with an interest in “upstream” prevention of non-communicable disease—the “causes of the causes”. The Government have repeatedly emphasised the importance of prevention as the way to approach our current increasing load of chronic non-communicable disease. The Five Year Forward View, whose findings have been accepted by the Government, referred to the work of Derek Wanless, who warned some 15 years ago that unless the country took prevention seriously we would be faced with a sharply rising burden of avoidable illness. The Five Year Forward View points out that that warning has not been heeded and that the NHS is,
“on the hook for the consequences”,
with an increasing burden of largely preventable chronic illness that can be expensively treated or cared for but mostly not cured. So I will concentrate on the sections of the 2012 Act which concern public health and the reduction of social inequalities which are at the heart of any policy to improve the health of the population.
Theresa May pointed out, in her first speech as Prime Minister, the “burning injustices” of the wide gap in health between the highest and the lowest socioeconomic groups of the population. As the noble Lord, Lord Prior, knows very well, this gap has been extensively studied by Sir Michael Marmot and his colleagues at UCL. They have shown that the mortality rates and incidence of most diseases—particularly those which form the main burden on the health services today—are consistently related to social status across the board. The concept of the social determinants of health, first described in detail by Michael Marmot, is now recognised worldwide as basic to public health thinking. The 2012 Act includes changes in the provision of public health services that are potentially beneficial. Among measures that were given a guarded welcome by public health professionals in local government was the transfer of many public health functions from PCTs to local authorities. This change was logical, since local authorities have always been involved in some important public health activities. I could list other desirable changes related to the wider determinants of health, but it would take too long in a time-limited debate.
The concern of public health professionals about the move to local authorities was twofold: would the rearranged services be properly funded and would the status and independence of public health professionals within local authorities be assured? As noble Lords know, these concerns have been more than justified. The House of Commons Select Committee on Health’s report Public Health Post-2013, published just a week ago, states:
“There is a growing mismatch between spending on public health”,
which is set to reduce,
“and the significance attached to prevention in the NHS 5 Year Forward View”.
In fact the ring-fenced levels of local authority funding for public health were cut by £200 million last year, a move that was questioned in the House at the time by my noble friend Lord Hunt. This funding is on a steady downward trend until 2020, and will then have fallen in real terms by 25% since 2013. In addition, overall central government funding allocations for local authorities have been cut drastically since 2012, as everyone knows, affecting many local authority services which have a public health component. The Commons Select Committee on Health’s report concludes:
“Cuts to public health are a false economy. The Government must commit to protecting funding for public health. Not to do so will have negative consequences for current and future generations and risks widening health inequalities”.
These are strong words for a Select Committee.
The committee reports many other concerns about the functioning of the new arrangements and makes useful suggestions about how difficulties can be overcome, often using verbatim reports from witnesses describing  both good and bad practices. I commend its excellent report—it should have a green cover but in the Printed Paper Office it has a white one—to the Minister and hope he will be able to say that the Government will accept its recommendations and enact them in full.

Baroness Pitkeathley: My Lords, I too thank my noble friend for bringing forward this important debate, and I congratulate him on getting the time.
I always thought that the best thing about the Health and Social Care Act was its title. I was not alone in thinking that. It gave us hope that, at long last, the issue of social care would be put on a par with health in the delivery of services. Over the many years that I have been concerned with these issues, I have lost track of the number of times I have heard people say, “You cannot run a patient-focused NHS without regard to the whole patient experience”, which of course includes their experience of social care. Admission, discharge, post-discharge and follow-up are all inextricably entwined, especially for those with long-term conditions. So we had high hopes from that title and were repeatedly assured that the Government understood the importance of social care, that the new arrangements would ensure collaboration and co-operation between health and social care providers, and that adequate funding would be provided to local authorities to ensure that their obligations could be met.
Like many noble Lords, I had major misgivings about the disruption that the Health and Social Care Bill would cause and the money it would cost—especially as the promise had been made that there would be no top-down reorganisation of the NHS, as my noble friend Lord Rea has reminded us. The Bill appeared to presage not just a top-down but a bottom-up reorganisation. However, the idea of better integration certainly appealed to me. In 40 years of working in this area, I have noticed two things repeatedly. First, there is the absolute inability of any patient of any kind to understand the lack of integration, or sometimes the lack of communication, between the two services. Patients will always say, “But I don’t understand—why are they so different? Why don’t they talk to each other?”. Secondly, there is the repeated response of any professional involved in delivering patient care that more integration and co-operation is not only desirable but essential. So the test which I now apply to the Act is how we are doing on integration.
The Government were warned at the time that their proposals for structural reform were going too far, too fast. So far as social care is concerned, it is perhaps not fast and far enough. We have seen a social care system which is neither well funded nor sustainable and, as a consequence, which contributes to the problems in the NHS that so many noble Lords have mentioned. Two weeks ago, I visited an elderly friend in an acute ward. She had been ready for discharge for two full weeks but was unable to be discharged because of the lack of social care provision. Eight more people in the ward she occupied were in the same position.
A well-funded and sustainable social care system underpins a sustainable NHS. Delayed discharge is possibly the most pressing concern for the NHS and  the Department of Health at present. It is inextricably linked to rising social care demand, caused by the greatest social and political challenge of our time: the ageing population. That ageing population is of course also a triumph and we should celebrate it, but we cannot ignore the strain that it puts on our provision of health and social care services. Social care is the largest area of spending at local level and has been hit hard by central government-enforced austerity. Meanwhile, demand for social care is of course rising; it is predicted to increase by 44% by 2030. More people are living longer with more complex, long-term conditions that require a higher level of expertise and intervention. The Nuffield Trust has estimated that by 2020, there will be a funding gap in adult social care of between £2 billion and £2.7 billion, despite the social care precept and the better care fund.
I hope the Minister will not use the better care fund and the precept as a panacea, a cover-all, for these difficulties because they are already inadequate and do not compensate for the 37,000 social care beds which will be lost before 2020 nor for the introduction of the national living wage.
The Health Select Committee conducted an inquiry into the impact of the spending review on health and social care, and the chair, Dr Sarah Wollaston, concluded:
“Historical cuts to social care funding have now exhausted the opportunities for significant further efficiencies in this area. Increasing numbers of people with genuine social care needs are no longer receiving the care they need because of a lack of funding. This not only causes considerable distress to these individuals and their families but results in additional costs to the NHS. We are concerned about the effect of additional funding streams for social care not arriving until later in the Parliament”.
Will the Minister say when additional funds will be achieved and when they will arrive, and will he give us his estimate of how they are going to cope with many of these problems? I remind him that ADASS calculates that the sector will need £1 billion per year just to allow it to stand still and that most local authorities say that they will have to spend the whole of their budgets on social care within five years or so.
I have been disappointed in my hopes for social care from the Act, but I have also been disappointed in my hopes for the strengthening of the patient voice which was promised. Local Healthwatch and local health and well-being boards organisations have been patchy, as we warned the Government at the time that they would be, while the disempowerment of Healthwatch England by denying its independence and clipping its wings has not been an edifying spectacle.
As far as social care and integration is concerned, there are some excellent examples of good practice, as the Prime Minister acknowledged yesterday, but they are far too few and, as she also said, further review is necessary. I was very pleased to hear her say that at PMQs yesterday. I hope the Minister, who is so knowledgeable on this topic, will assure us that this review will take place soon, as it could not be more urgent.

Lord Lipsey: My Lords, like the noble Lord, Lord Kakkar, I sit on the Select Committee on the sustainability of the health service, chaired by the  noble Lord, Lord Patel. Last week, I came out of St Thomas’ Hospital, where I had had a TAVI—an operation on a heart valve—to sit down to the backlog of papers from the committee. The first paper I picked up said quite clearly that unnecessary treatments should be eliminated—for example, TAVIs, which are completely ineffective. All I can say is, in that case I have had the mother and father of a placebo effect.
I mention this simply to say that in the general gloom that so easily pervades debates on our health service, we can forget what it is really like. My experience was marvellous—clinical marvellousness, caring marvellousness—and I was in and out, after a general anaesthetic, within three days. So let us not play down what our health service is delivering. It is because it delivers these things that it is so precious and our people will never let it go.
I am very grateful to my noble friend Lord Hanworth for introducing this debate. I think he sometimes got a little carried away with his own rhetoric. The moment at which he accused the party opposite of cunning concealment by putting their proposals in a pamphlet struck me as one example. In general, I cannot share his view of the 2012 Act and its consequences any more than I can share that of the Secretary of State who introduced it. My take is that only three years have gone by since its provisions came into force and it is clearly too early to form any sort of verdict, particularly since there is a much more important effect, which is the amount of spending that is taking place and the staff and resources available. It is far too early.
However, Sir Muir Gray of Oxford University, a most distinguished witness who appeared before our committee on Tuesday, said:
“I speak as a veteran of 22 re-organisations, most of which have made no difference at all”.
I expect that this one will be broadly the same. Talking to people who understand, work in and know the work of the health service, there is a consensus that it works not because of the Ozymandian bureaucracies erected by Governments—and endorsed by Parliaments, let us remember—but in spite of these bureaucracies, which mostly serve only to add cost and complexity.
I will say a word or two about the sustainability of the health service. This language has become embedded in all sorts of words. We even have sustainability and transformation plans—words which fill me with gloom at their lack of transparency. The trouble with sustainability is that it suggests black or white. We either have a health service that works or a health service that has collapsed, in which case we have to have a new system: private healthcare as in America, a Bismarckian system as in Germany, or whatever. But, of course, it is not like that at all.
First, we have to ask what it is about the health service that has to be sustained. A phrase that is trotted out as if it were obvious the whole time is, “free at the point of use”. We do not have a health service that is free at the point of use. Lots of healthcare is paid for, as the noble Lord, Lord Colwyn, made clear in his speech on dentistry. We have north of £500 million of prescription charges—which, incidentally, are becoming quite a barrier to some people taking the care they   need—for across-the-counter medicines. John Appleby of the Nuffield Trust suggested to the committee that private spending on health in this country amounted to 1.5% of GDP. It is not as big as public spending, but it is a pretty big chunk. So let us be clear that there is a wide range of “free at the point of consumption”.
Another phrase is “a national health service”. We do not have a national health service. The provision of specific treatments varies hugely from place to place, in a way that is very difficult to account for—factors of fourfold and even tenfold, as Sir Muir explained to our committee. Different social classes get widely different provision and as a result have widely different expectations of life. For example, in some areas 78% of people die at home and in others 46%; that is the range of experience.
There is a more sensible way of looking at sustainability. Somehow or other, the supply and demand for healthcare has to be balanced—that is inevitable. The main factor affecting supply is how much money the Government, and by extension society—taxpayers—are prepared to raise to pay for it. Healthcare is a menu with prices and we can imagine a health service in which people can choose only thin gruel and one which provides caviar for all. It depends almost entirely on how much money people are prepared to put in.
The real question is therefore not whether we have a health service that is sustainable, but what kind of health service we want. When we have decided what we want, are we prepared to pay for all of it, some of it, or rather little of it? Importantly, how can we get the maximum of what we want for the minimum we put in? I am afraid that those people who think there is a magic wand that can be waved and surgeons can double the number of operations they do in five minutes are barking up the wrong tree. From these core questions, the 2012 Act was essentially a distraction. I hope your Lordships’ committee may do a little better.

Baroness Walmsley: My Lords, I thank the noble Viscount, Lord Hanworth, for initiating this debate, and the noble Lord, Lord Lipsey, for what he said at the beginning of his remarks. I think we all have a great deal to thank the NHS for and we should always remember that.
There is no doubt that the 2012 Act was the biggest reorganisation the NHS has ever seen. It was also probably the most controversial. It was opposed by the British Medical Association, the Royal College of Nursing, the Royal College of Midwives and the Royal College of General Practitioners. While accepting the principle that doctors should have a role in commissioning, the Royal College of Surgeons and the Royal College of Physicians were highly critical of the proposed mode of implementation.
I would judge the success of the Act by whether it minimised the health inequalities in this country, whether it treated physical and mental health equally, and whether it made health and social care sustainable for the foreseeable future. Whatever David Cameron and the noble Lord, Lord Lansley, had hoped would be the benefits, I suggest that we are yet to see them fully realised. Experts agree that none of the many  reorganisations has really benefited patients in the end, and this was a particularly expensive one. One wonders how many treatments could have been paid for by the £1 billion redundancy bill alone.
The stated purpose was to “liberate” the health service. Well, it certainly liberated a lot of money which is now in the pockets of many private providers who have come into the health service since 2012. I am not saying that I believe any participation of private companies is in itself a bad thing—of course not—if they can provide better services at an equal or smaller cost to the public purse than that offered by NHS providers. The primary principle must always be that healthcare is, as far as possible, free at the point of need and cost effective to all of us taxpayers. The problem is that we are now seeing evidence that the criteria for whether we need the services or not, and therefore whether we get them, are being tightened in both health and, particularly, social care, as some services close down and the rest try to provide for a growing and ageing population, and pay for healthcare price inflation.
Of course, one cannot attribute all the cost inflation to the profits made by privatised services. Some of it is attributable to the increasing cost of the research that underpins the development of wonderful new drugs and treatments. That of course is something that I, like the noble Lord, Lord Kakkar, welcome, although there is always room for effective price negotiation at a national level. However, the fact remains that the NHS is struggling in a way that we have not seen before, and this is surely unsustainable. The NHS budget for this Parliament, as we heard from my noble friend Lady Tyler of Enfield, will be short of £22 billion by 2020, and the solutions outlined in the Five Year Forward View are not yet showing convincing results. It is right that all services are scrutinised as to their efficient use of money, and I understand that millions could be saved if the least efficient took several leaves out of the books of the most efficient. However, as with many other things, you need money up front in order to save costs down the line, especially if you are going to replace face-to-face consultations with digital communications and home testing kits.
On top of that, the Government promise £8 billion extra for the seven-day NHS, which even Simon Stevens says is not enough. A majority of acute hospital trusts are in deficit, and many GP practices are ceasing to take new patients because of unacceptable waiting times for appointments. Everyone knows how concerned the junior doctors are about all this. Although I believe that the planned series of five-day strikes should not go ahead without a further ballot of all BMA members, this historic reaction of the doctors to government policy does indicate that the dispute is not just about the detail of their weekend pay or training structures. They are worried about the survival of the NHS as we know it. Clearly, they have made their judgment about the effects of the 2012 Act.
Sustainability was a key word in the noble Viscount’s Motion for this debate, and it has to be one of the key criteria for judging the 2012 Act—apart, of course, from whether it improves services for patients. Nobody I have talked to believes that the current proposals for  economies and efficiencies will deliver what is needed, especially given the continuing rising demand. There is evidence that the preparation of the sustainability and transformation plans is not going well. The STP process has been very top down and has become focused on short-term savings rather than longer-term sustainability. This could lead to fragmented care and wider inequalities. Neither has it been very transparent.
A current example of short-term savings is the recent closure for three months without consultation of the 12-bed ward at Rothbury Community Hospital in Northumberland. The hospital is only nine years old, purpose built to serve this very rural community, and is a valued resource. It serves a remote and ageing population, providing care to patients whose families would have enormous difficulty visiting them if they had to go to the nearest general hospital. There are serious concerns about whether due process has been followed. I am not sure, frankly, whether it is part of an STP, but it certainly does not sound like the result of a thoughtful, long-term review of local need, and is opposed by the local people and the local GP practice. Would the Minister care to comment?
Accountability is another issue which has not been well served by the 2012 Act. Even when the Bill was going through Parliament, there were concerns about this. Senior figures from the King’s Fund said at the time:
“At a national level, it is difficult to see who, if anyone, will be in charge of the NHS”.
It is still unclear how the five national bodies interact with each other, and where the Secretary of State comes into the picture. Does the buck stop with the DoH and Jeremy Hunt anymore, other than providing the money? It seems that when it is inconvenient for him to take responsibility Mr Hunt relies on the fact that powers have been delegated to these five agencies.
At local level, fragmentation, as we have heard from other speakers, makes accountability difficult. Although the principle of clinicians’ having a role in commissioning is one which most of us would support, there are concerns about the abilities of some of the clinical commissioning groups and about the fact that their very existence means a postcode lottery. Devolution to a local level has its advantages, but there are dangers, such as to patients with rare but expensive diseases which may not be funded by their local CCG. This is where national strategies come in, but they need money too.
Mental health, as we have heard from the noble Lord, Lord Lansley, is still a work in progress. Only today, my right honourable friend Norman Lamb has published evidence of the shambles in CCG provision for psychosis.
My greatest hope for the 2012 reorganisation was the local health and well-being boards. I hoped that they would bring together local services and resources and make the most appropriate provision for public health and social care in their areas with the involvement of the local authorities. Sadly, repeated cuts in public health funding have got in the way of local authorities’ realising their potential in making a difference to the health of their local communities. When public health  funding is cut, and cannot be subsidised by cash-strapped local authorities, prevention suffers, leading to increased costs in the long term. We have seen preventive services being cut all over the country. In addition, local council representation on the boards is in the minority. The boards’ powers are not really broad enough for them to influence matters such as housing and air pollution, both of which have major consequences for health. Colleagues on health and well-being boards believe that the cultural divide between the self-determination of local government and the top-down NHS is a huge hurdle to these boards’ achieving better health and social care integration.
I strongly believe that the public do not want to be treated by more and more doctors on more and more days of the week. What they want are services to help them remain well for longer and for appropriate services towards the end of their lives, and they want that period of acute need to be as short as possible. Sadly, this country falls behind others in that respect. In the Scandinavian countries, the period of high-level need for health services at the end of life is, on average, much shorter than it is here. People remain well longer. Why is that? I would judge the 2012 Act on whether it promotes the Scandinavian standard. In order to do so, it would have supported more preventive services. I for one would have cheered. But it did not, so I have not.
What we need now, as has often been said by my right honourable friend Norman Lamb, is a genuine cross-party debate on how much we need to spend on health and social care and the fairest way of raising the money. I encourage all parties to consider this proposal seriously.
I would also propose that one of your Lordships’ excellent ad hoc Select Committees should do post-legislative scrutiny on the effects of the 2012 Act, along the lines of the very useful report of the committee chaired by the noble Baroness, Lady Deech, on the impact on disabled people of the Equality Act 2010, which was debated in your Lordships’ House on Tuesday and was a very useful exercise.
Will the Minister consider supporting proposals for such a committee on the impact of the Health and Social Care Act 2012? It would be able to take evidence in a way that has not been possible for noble Lords preparing for today’s debate. I think that we would learn a great deal from it.

Lord Hunt of Kings Heath: My Lords, as this is such a general debate, I remind the House of my interests as president of GS1 UK, the Health Care Supply Association, the Royal Society of Public Health and the British Fluoridation Society, as a trustee of the Royal College of Ophthalmologists and as a consultant and trainer with Cumberlege Eden.
I am very pleased that my noble friend Lord Hanworth opened this debate today with an extensive, and indeed passionate, analysis of the NHS. He thinks that it is in a critical position, and I agree with him. Whether it is down to the overt privatisation of the NHS encapsulated in the 2012 Act or whether it is essentially down to underfunding is, I think, a matter for some debate.  On the matter of privatisation, I should say that I have no problem whatever with the involvement of the private sector in the NHS; indeed, I think that there is much to be gained from partnership with the private sector. The noble Lord will know that, as a Minister, I was responsible for some of the contracts that were put in place to enable us to reduce waiting times, which I think was an excellent thing to do.
I agree with my noble friend that the NHS seems to have been forced to tender out services willy-nilly, at great expense and, frankly, with very poor outcomes. I know that the noble Lord, Lord Lansley, said that it was not his intention that clinical commissioning groups should be forced to do that; it was going to be down to them. Indeed, when he introduced the Bill and talked about it, the emphasis was very much on local GPs making the decisions. The problem is that CCGs themselves—and certainly NHS England—misunderstood those messages, and CCGs felt under pressure to put some services out to tender. I do not think that the outcome has been very satisfactory at all.
I say also to my noble friend that I disagree with him about the NHS foundation trusts. I believe that the local governance that they have, making them much more accountable to members locally, is something to be treasured and supported.
I will just address PFI. Yes, there were some schemes that were expensive and not well-managed contractually, but the fact is that, as a result of PFI, we were able to invest huge amounts of money in the infrastructure. If you want to look at PFI, I would look no further than my own local district general university hospital, Birmingham QE, which is a magnificent example of a PFI scheme, delivering fantastic services and which, overall, is affordable. It is worth saying that unpublished figures to the Health Select Committee from the Health Foundation, which look at expenditure on PFI in 2013-14, showed that it accounted for 1% of providers’ total expenditure. It is not PFI that is breaking the bank.
We need to be more dispassionate about the kind of health service we want and how we want to see it organised in the future. What happened in the 2012 Act is a salutary lesson to us all. I, too, was surprised at the Government’s decision to go for wholesale reorganisation. After all, it had a pretty good inheritance: there had been investment; waiting times had been reduced; and the infrastructure had been invested in. I tempt fate to try to persuade the noble Lord, Lord Lansley, to say at some point, but I never understood why he simply did not get PCTs to do what they should have done, which was to delegate much more decision-making with budgetary responsibility to GPs, rather than going for the wholesale reorganisation that we saw. I accept that the health and well-being boards—the potential integration of health and social care—were a very important and supportable part of that Bill. The problem is that the rest of it has produced a chaotic system in the field.
My noble friend Lord Lipsey mentioned Sir Muir Gray. He said that no reorganisation has ever produced anything of any use. I have some sympathy with that, although I suppose I must own responsibility for two or three of them. The fact is that this reorganisation produced great confusion and fragmentation at local level and, above all, a sense that no one was in charge.
My reading of sustainability and transformation plans is, essentially, that they have been established by NHS England to replace strategic health authorities because they have to have some kind of local plan and leadership. The problem is that they lack legitimacy; I am afraid they lack openness and I hear that, in many parts of the country, they have not involved local government at the start. That is a great pity.
More worrying, I hear too that STPs have come up, in the main, with tired, old solutions. So they are going for heroic reductions in acute sector capacity. They say that they are going to have fantastic, demand management approaches to reduce the intake, but the reality is that there will be no leverage over GPs, primary care or local government to make it happen. It was fascinating listening to the comments of the noble Lord, Lord Kakkar, about the Netherlands and the way in which it should be done. I am afraid that, so far, there is very little evidence that STPs are going down that route.
In July, the chief executive of NHS Improvement said that the NHS is “in a mess”. That was putting it kindly. We have huge deficits; performance has gone completely south, and I doubt that the Government are going to get back to any of those targets in any substantial way over the next four years. No one else in the health service believes that the targets are going to be recovered. At heart, we have this issue of an increase in demand for services, coupled with demographic changes, and the growth rate in resources is less than the health service has ever had in the past. We know that, historically, up to 2015, average real terms growth was 4% a year; it is now down to about 1%. It is abundantly clear that it simply cannot be done.
When you look at the OECD comparisons, they are pretty shocking. There are 29 countries which have more CT scanners per capita than we do. There are 28 with more MRI units and 25 have more hospital beds per capita. That gives the lie to those who think that the acute sector in this country is overinvested. Thirteen have more doctors per capita; 18 have more health expenditure; 18 have more nurses. On comparative terms, I agree with my noble friend Lord Lipsey, it is almost a miracle that it achieves what it does with the kind of resources that it is given.
My noble friends Lady Armstrong and Lady Pitkeathley spoke eloquently about the issues in social care and the funding squeeze. The noble Lord, Lord Lansley, was right about the disappointment over the implementation of the Dilnot report. It is very difficult to see where we are going overall in health and social care, except into a long-term decline. It feels like we are going back to the days when you had long waiting lists and disintegration between different parts of the service. The rhetoric is there. Ministers talk about integration, as do the STPs, but, from talking to anyone in the field who has either to do it or is a patient or a client experiencing the service, things just seem to be getting worse and worse and worse.
I do not have the time to talk about Brexit but, at the same time, there are issues to do with staffing. My major concern is about long-term investment in the life sciences in this country. The research issue to which the noble Lord, Lord Kakkar, referred is very serious.
We have the Select Committee, two members of which spoke in the debate today. It has a very important task ahead of it. It could come up with a soft report, looking at all the options one way or the other and then ducking out of a hard recommendation. I urge it to go in hard. As my noble friend Lord Lipsey said, we face fundamental questions about what sort of health and social care system we have, what we are trying to do and about the demographics and how we are going to afford it. It would be all too easy to shy away from making the kind of hard decisions that have to be made. I very much hope that our Lordships’ House and its Select Committee will help us do that; I do not think the Government will.

Lord Prior of Brampton: My Lords, first, that was an extremely good, incisive speech from the noble Lord, Lord Hunt. I do not agree with all of it—he would not expect me to do so—but it raised all the right issues.
I join everyone in thanking the noble Viscount, Lord Hanworth, for raising this subject. I do not recognise the picture that he painted of the NHS and I have been involved with it since 2002. For the avoidance of any doubt at all, I put it on the record that Jeremy Hunt, myself and the Conservative Government believe wholeheartedly in a tax-funded comprehensive National Health Service. I do not want there to be any doubt about that and I want it to be on the record. I know that Jeremy Hunt would absolutely refute any thought that he believed in an insurance-based National Health Service.
I want to focus noble Lords’ attention on today’s debate, which is about the Act. Therefore, if noble Lords will forgive me, I will not address the social care settlement and will not give our response to the Public Health Post-2013 report, which was raised by the noble Lord, Lord Rea. We have only just received this report. I think that response will come in due course. I say to my noble friend Lord Colwyn that I will not address in any detail the questions he raised about dentistry.
The noble Baroness, Lady Walmsley, gave a list of all the people who opposed the Act. I hope she will not think me churlish if I remind her that the Liberal Democrats supported the Act at the time. On the impact of the Act, I find myself in almost total agreement with the noble Lord, Lord Lipsey—not total agreement, but almost—because if we look at what drives healthcare and the changes in healthcare in this country, it is not the numerous reorganisations, however big or large they may be. It is in part demography, as the noble Baronesses, Lady Armstrong and Lady Pitkeathley, mentioned. Demography is at the heart of it. We have an ageing population yet we have a healthcare service which is not geared up to serve an ageing population, many of whom have multiple long-term conditions. It is also a question of lifestyles. I was in America for much of August and obesity is a massive problem there. It is a huge problem in this country as well. The comments made about Michael Marmot and the social determinants of healthcare were equally true. Poverty is a huge contributor to health inequalities, as we know.
The noble Lord, Lord Kakkar, raised technology and its uptake. Technology will have a huge impact on how we deliver healthcare over the next five, 10 and 20 years. Genomics, bioelectronics, integrated health records, big data and personalised medicine will have a huge impact. We will publish the accelerated access review later in September, which I think will address some of the questions that the noble Lord raised.
The noble Lord, Lord Hunt, raised the much wider issue about life sciences in the post-Brexit world. We cannot address those issues today but it is an absolutely critical area that we as a country have to address.
My noble friend Lord Lansley was absolutely right that money is critical in this regard. When the Act came in, he did not know then as Secretary of State that we were looking at a 10-year period with an approximate 1% real growth in healthcare spending against a background when we were spending 4% or 5% a year for many years, and, of course, a very tight local authority financial settlement as well. Finally, there is an issue of culture. People always say culture eats strategy before breakfast. Well, it devours reorganisations. In a people-centred organisation like the NHS, where you have deep vocational and professional attitudes, culture is hugely powerful. We may think that we can tinker with the healthcare system in this House or in the other House, but getting behavioural change from clinicians takes many years. Let us look at NPfIT, the national programme for information technology, which the noble Lord, Lord Hunt, was very much involved with. You can fiddle around with these things in Richmond House, but to persuade people to change the way they work is much more difficult. I think Sir Muir Gray and the noble Lord, Lord Lipsey, are by and large right: we exaggerate the impact these reorganisations can have.
Let us look at the current performance. I acknowledge it is really tough. The targets for acute hospitals—the four-hour waiting times, the 18-week RTT—and the ambulance service are very hard to meet. I totally acknowledge that. It is not surprising, because over the last five years, the number of attendances in A&E have gone up by 2.4 million people. Over the same period, 1.7 million extra people with suspected cancer have been seen; 6 million more diagnostic tests are taking place this year than five years ago; and there are 22,000 more daily out-patient appointments. I could go on. The growth in demand over this period, at a time of great financial stringency, makes things extremely difficult. We should be under no illusion about it. The NHS is doing magnificently against this difficult background; the noble Lord, Lord Lipsey, gave a personal example. The Economist Intelligence Unit recently found that, in its view, our end-of-life care was the best in the world. The Commonwealth rankings are still very favourable. The OECD has reported on improving outcomes in a number of cancer specialties. However, the noble Lord, Lord Hunt, is right; we have fewer doctors per capita in this country, fewer nurses, fewer MRI machines, and fewer CT machines. Despite all the PFI investment over the years, many hospitals are in desperate need of refurbishment, renovation and rebuilding. The NHS performs fantastically well in very difficult circumstances. I still believe that it is the best-value healthcare service  in the world. All this has been helped a great deal by the overhead savings that came out of the Act introduced by the noble Lord, Lord Lansley: £6.9 billion of overhead reduction in the last Parliament, at a one-off reorganisation cost of £1.3 billion. I accept that is a huge amount of money, but nevertheless the overhead savings have been significant.
At the heart of many reorganisations is the issue of how we drive improvement. During the new Labour years, we went through a period of command and control from the centre, moved to targets and then moved to more devolution with foundation trusts. Competition and choice were put at the heart of the new Labour efforts to get sustainable change in the NHS. The Act went no further than that. In many ways it put things on a more even footing. Talking to my noble friend Lord Lansley, it is clear that he is agnostic. I think we are all agnostic about who supplies. The noble Baroness, Lady Walmsley, is agnostic; the noble Lord, Lord Hunt, is agnostic. We want the best suppliers to the NHS, whether they are from the public, private or third sector, or anywhere else. I clearly remember the then Secretary of State for Health, John Reid, now the noble Lord, Lord Reid, talking in 2007 or 2008 about perhaps 15% of supply for elective surgery coming from the private sector. Today, the scale of private provision is 7%.
This is where we come back to culture being stronger than anything that we, or the previous Labour Government, do in these Houses. The culture in the NHS is not all that open to private provision, but where private sector companies can provide a better service at a better price, they should be entitled to do so. However, we have to recognise that the opening up of the market, with choice and competition, has not had the success that we would have hoped for. Healthcare is not a perfect market; it is about as imperfect a market as you can find. So we have moved beyond choice and competition to a new approach—one based on transparency and on trying to identify and eliminate unwarranted variation, whether through the Right Care programme in NHS England or the Getting It Right First Time programme in NHS Improvement. I have huge hopes that we will be able to engage clinicians and try to drive improvement through a process of transparency.
Turning to the future, I want to give noble Lords two short quotations. The first is from the NHS Plan of 2000:
“The NHS is a 1940s system operating in a 21st century world”.
I think we would all agree with that. There is a similar quotation from 2014—14 years later—from Simon Stevens in the NHS Five Year Forward View. He says that there is,
“broad consensus on what that future needs to be … It is a future that dissolves the classic divide, set almost in stone since 1948, between family doctors and hospitals, between physical and mental health, between health and social care, between prevention and treatment. One that no longer sees expertise locked into often out-dated buildings, with services fragmented, patients having to visit multiple professionals … endlessly repeating their details because they use separate paper records. One organised to support people with multiple health conditions, not just single diseases. A future that sees far more care delivered locally but with some services in specialist centres where that clearly produces better results”.
We are all agreed on what the future should be. The noble Baroness, Lady Pitkeathley, says that she has heard this for 15 or 20 years. That is true, but it does not make it wrong. We have to join up health and social care; we have to integrate healthcare. Yet, since 2000—the date of the first quotation I gave—we have gone in almost the opposite direction. We have driven more and more care into acute hospitals.
I shall give your Lordships an interesting statistic. Between 2000 and 2014, the number of hospital consultants rose by 82%, the number of GPs by 22% and the number of community nurses by 14%. That shows where the money has gone—it has, I am afraid, gone to the wrong place. We have to reverse that trend but it is very difficult to do so. We have to take resource away from where it has been going for the last 15, 20 or 40 years and put it back into the community, back into mental health and back into primary care. That is the genesis and essence of the five-year forward view. It is the essence of the devolution to Manchester and it is behind the STPs that we have been talking about.
In response to the question, “Does the 2012 Act hinder or facilitate this process?”, I have to say that I do not think we would have had the five-year forward view without the Act. If that forward view had not been an NHS forward view—if it had involved Tony Blair and Alan Milburn or Jeremy Hunt and David Cameron—it would not have happened. The devolution of a great deal of operational power—away from politicians and away from the Department of Health and Richmond House to the NHS—at least gives us a chance of integrating care in the way that we all know it should happen. Whether we are going to be able to do it, I do not know. We have heard a lot of pessimism today about the STP process. However, I am much more optimistic. I shall not stand here and say that I think we are going to have 44 STPs and that they are absolutely marvellous, but most of these plans are genuinely local. They are being drawn up by local people—by hospital trusts, but also by CCGs and local authorities—many of them are led by local authorities.
I think the jury is out. These plans will come out at the end of October; we will have a chance then to see them. They will not all be good, but if a number of them are good and we can get behind them, it will make a difference. In Simon Stevens’s document, there are a number of care models, which are nearly all based on reducing demand on acute hospitals. It may be that finally we have won the argument. I hope that this will not embarrass the noble Baroness, Lady Armstrong, but three or four months ago Paul Corrigan wrote a very good blog—he is always incisive, and it was a very incisive blog—in which he said that the pressures on acute hospitals are great, and that if we carry on putting resources into acute hospitals, they will not change; there will be no need to change.
For the first time, there is a real possibility that we will get this change, although I do not for one minute underestimate the practical difficulties of doing so. I think it was Mao Tse-Tung who said, when asked about the impact of the French Revolution, that it was too early to say. It probably is too early to give a final verdict on the impact of the Act brought in by my noble  friend Lord Lansley. However, like all reorganisations, it will be smaller than originally anticipated. If it enables the fulfilment and the implementation of the five-year forward view, I think it will be judged a resounding success.

Viscount Hanworth: This has been an interesting and disturbing debate. We have had a diversity of opinions regarding the state of the NHS and its likely future, not many of which have been favourable. I am heartened by what I understand to be the reaffirmation of the founding principles of the NHS by the noble Lord, Lord Prior; however, I am very doubtful of his optimism.
Be that as it may, I draw attention to the National Health Service Bill, a Private Member’s Bill that had its Second Reading in the Commons on 11 March. The Bill, which was known in a previous version as the NHS Reinstatement Bill, proposes to reverse the 25 years of privatisation in the NHS by abolishing the essential purchaser-provider split, by re-establishing public bodies and by enshrining that the NHS reverts to an accountable public service. The Bill, which has been presented again for the 2016-17 Session, had another First Reading in the Commons on 13 July. It received the support of numerous Labour MPs and even from some Conservative MPs. This Bill merits our attention, as do the speeches that accompanied its introduction.
I reiterate that I am very grateful for all contributions to what has been a very fruitful debate—at least I hope it has been.
Motion agreed.

National Minimum Wage (Amendment) (No. 2) Regulations 2016
 - Motion to Approve

Moved by Baroness Neville-Rolfe
That the draft Regulations laid before the House on 4 July be approved.

Baroness Neville-Rolfe: My Lords, the purpose of these regulations is to increase the hourly rate of the national minimum wage and increase the maximum amount for living accommodation that counts towards minimum wage pay to ensure the provision of higher-quality accommodation by employers, in line with the recommendations from the Low Pay Commission.
The national minimum wage is designed to protect low-income workers and provides an incentive to work by ensuring that all workers receive at least the hourly minimum rates set. It helps to deter unscrupulous employers from competing on very low pay.
Following advice from the Low Pay Commission, the Government are uprating the minimum wage from 1 October, so that the main rate for 21 to 24 year-olds will be £6.95 per hour. This represents an increase of 3.7%, despite CPI inflation currently being 0.6%.
Younger people aged between 18 and 20 years-old will be entitled to a minimum of £5.55, a 4.7% increase on the rate currently in force, and those between 16 and 17 years old will have a minimum wage rate of £4 an hour. For apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, we are increasing the minimum wage by 3% to £3.40. This follows the 57% increase to the apprenticeship minimum wage last year, the largest increase to date.
For 21 to 24 year-olds, this is the largest increase in the main rate of the national minimum wage since 2008. It will mean that someone working full time on the national minimum wage will see their earnings increase by around £450 per year. The new main rate of the national minimum wage is expected to be at its highest level ever when accounting for the general increases in prices, surpassing its pre-recession peak. In all, we estimate that around 500,000 workers are expected to benefit from the national minimum wage increases being debated today.
The accommodation offset was introduced in 1999. It limits the amount that employers can recoup through accommodation charges. This year we followed advice from the Low Pay Commission and increased it significantly by 12% to £6 a day from October 2016. This is intended to ensure the provision of higher-quality accommodation by employers.
Since its introduction in 1999, the national minimum wage has been a success in supporting the lowest-paid UK workers. Over that period it has increased faster than average wages and inflation without an adverse effect on employment. It has continued to rise each year during the worst recession in living memory and the new main rate is expected to be at its highest-ever real value.
These increases to minimum wage rates are of course in addition to the national living wage for those aged 25 and over, which we implemented in April. It is the Government’s ambition for the national living wage to reach 60% of median earnings by 2020. In addition, the national minimum wage cycle will be aligned with the national living wage cycle from April 2017. This will reduce the burden on businesses that have to update their workforce’s pay more than once a year and will mean that the statutory pay floor for all ages is uprated simultaneously.
I note the findings of the recent research conducted by the Federation of Small Businesses and understand that some concerns have been raised about the impact on businesses’ profitability. Let me address this point specifically. The Government are committed to ensuring that the new rates work for businesses of all sizes and we continue to work closely with the LPC to consider the wider economic and business impact when recommending and setting national minimum wage rates. We have already introduced measures to mitigate the cost to business of our ambition to move to a higher-wage economy, including increasing the employment allowance from £2,000 to £3,000 this year. This measure will benefit up to 500,000 employers and take 90,000 employers out of NIC payments altogether.
For smaller businesses we have extended the doubling of the small business rate relief for a further year until April 2017. Around 600,000 small businesses benefit  from the small business rate relief and about 405,000 businesses will pay no rates at all as a result of the extension.
The most recent employment statistics show that the employment rate is at a record high, with almost 32 million people in work and the unemployment rate at its lowest level in more than 10 years, with fewer than 1.7 million people unemployed and wages up 2.4% on a year earlier, while inflation has, of course, remained low. While the referendum result may have introduced uncertainty over forecasts and assessments made before June, we should remember that the UK labour market was remarkably resilient during the worst recession in living memory.
The new rates are recommended by the independent Low Pay Commission, which consulted extensively with stakeholders representing both business and workers, as well as conducting comprehensive research and analysis. Crucially, the Low Pay Commission has proven that a rising minimum wage can go hand in hand with rising employment. The carefully considered independent advice from the Low Pay Commission is central to maintaining this balance. In particular, its remit is clear that, when considering the pace of increased minimum wage rates, the state of the economy should be taken into account. The LPC have stated that the labour market has continued to perform well, with robust employment growth in low-paying sectors.

Lord Fox: My Lords, the Minister is right to suggest that we have high or record high employment levels. We are also at record levels of zero-hour contracts. The minimum wage is not actually a wage; it is a minimum hourly rate and people fight to get sufficient hours to get that minimum wage. Can the Minister comment on the way in which the Government will approach the zero-hour part, which is diminishing the minimum wage for many people across the country?

Baroness Neville-Rolfe: We have debated zero-hours contracts in this House a number of times. I continue to believe that they have a part to play in the modern flexible market. There were some abuses to those contracts, which we discussed last year, and we have banned the use of exclusivity clauses so that people have the freedom to look for and take other work opportunities and have more control over their work hours and income. However, I believe that a strong minimum wage framework with good enforcement, which I am going to talk about, is the right way forward. The effectiveness of this system—I think that this is true in every regulatory area that I deal with—relies on proper enforcement.
We are clear that anyone entitled to be paid the national minimum wage or the national living wage should receive it, whether they are on a zero-hours contract or not. The enforcement of a minimum wage is therefore essential to its success and we are committed to cracking down on employers who break the minimum wage law. That is across all sectors of the economy. That is why we have increased the enforcement budget for HMRC, which enforces the minimum wage on behalf of our department. That is £20 million in 2016-17, up from £13 million last year. That bolsters  its resources and ensures that it can respond to every worker complaint. We will continue to take a tough approach to employers who break minimum wage law. As of April this year, the Government have also doubled the national minimum wage penalty paid by employers, so it is up from 100% to 200% of the arrears owed to the worker, up to a maximum of £20,000 per worker—penalties that really hit those who do not comply with the law. Finally, HMRC will continue to refer the most serious cases of wilful non-compliance for criminal investigation.
The Government believe that the rates set out in the regulations before the House today will increase the wages of the lowest paid while being affordable for business. I commend the regulations to the House.

Lord Stevenson of Balmacara: My Lords, first, I express my apologies to the House for not being present at the start of the discussions. I looked at the Annunciator and thought that I had about 10 minutes to spare, because the last speaker in the debate had only just started, but apparently he cut his speech very short. I was entranced by a debate going on in the Moses Room on access arrangements for going into secondary education, which was so good that I have completely lost my place. I am sorry that I was late.
However, I have heard the Minister speak on many of these issues before. Indeed, we debated them as recently as the end of last term. I am fairly aware of the issues and I will certainly read what she said carefully, in case I have missed anything. I have no objections at all in principle to the proposal that is being brought forward. For all the arguments made by the Minister, this process is now well-entrenched. The increases are very modest, but they are done in accordance with the procedure set out. I have absolutely no doubt that it is appropriate and good that wages will be lifted, which will benefit a large number of people on lower pay. Women in particular will see these benefits in their pay packets.
I have four small points that I want to raise and to which I would be happy to hear the Minister respond, but if there are complications I am happy to receive a letter in due course. The first is a technical one, which was that the paper supplied by the Printed Paper Office includes an impact assessment. It is extremely well-written and I compliment officials on that. I enjoyed reading it and I felt that it dealt with all the issues well. However, it said that the RPC opinion was awaiting scrutiny and I have not been sent that. I would be grateful if it could be provided. I am sure that there is no difficulty around it, but it would be nice to have a complete set of papers when we are considering these issues. On technical issues, I again congratulate the Minister on living the life that she promised, which was to bring these things in on the common commencement date of 1 October. She will have expected me to say that.
Secondly, the evidence base for many issues, but particularly for non-compliance and to some extent apprenticeships, depends on a rather oddly named survey called ASHE—a survey of employees completed by employers, which can be used to identify jobs paid below the national minimum wage. Clearly non-compliance is important here. Two points arise from  it: is that the best we can do, and does the department have any plans to improve it? A survey of employees completed by employers aimed at establishing whether the national minimum wage is being paid at the correct rate may not be the most appropriate and independent way of checking whether it is happening in practice. Having said that, we note that some 209,000 employees’ jobs were paid less than the national minimum wage in April 2015. That is a significant number and ought to be of some concern, even though the individual amounts are small. It is the methodology that I pick up on. I would be interested to know whether the Minister has plans to improve it, because, as she said, it is important to ensure that the national minimum wage and, as we get to it, the national living wage are paid. If we do not have an adequate means of checking, I do not see how we will do so.
My third small point raises a similar issue. Quite an important part of some people’s pay packets is the accommodation offset rate. Accommodation is the only benefit in kind that can be offset against minimum wage pay. It is only up to the limit. I suspect that it is therefore quite an important element for quite a large number of the people involved, but the trouble is that we do not know how many that is, since apparently no statistics are available that give any details around it. The increase this year is 12%. It is a substantial amount of additional money, which goes up to £6 per week, but because of the uncertainty in knowing how many employees in scope of the national minimum wage offset rate receive it, it is not counted in analysing what the benefits, costs and disbenefits would be of any increase. I do not wish to delay consideration but, in the need to improve the quality of the public administration, surely we could do a bit more to survey and get accurate information. If it does not lie in BEIS, perhaps it lies in DWP—I am sure that the noble Lord, Lord Freud, is taking note of the points that I make, because I am sure it is relevant to what he will say.
Finally, in a week where we have been given a lot of information about the activities of a particular sportswear manufacturing and delivering firm, it seemed a little ironic to read about the enforcement regime and the relatively small number of firms that have been reported on and investigated. Sports Direct—it may as well be named—clearly has a large problem on its plate in what it has been paying, or not paying, its employees. The situation with Sports Direct arose from a private investigation by a newspaper, not from the additional money available to HMRC. Has that taught the department any lessons about how this is to be taken forward? Might it wish to investigate other firms as a result? Its approach seems to be one of responding to complaints. That might miss some of the most obvious cases where not enough action is taking place.
What sort of approach would be better? Is there not a suggestion to be made of a tougher approach to large employers employing large numbers of people on zero-hours contracts, where it is clear that the combination of that arrangement, particularly in companies controlled perhaps by an original owner, might suggest that there will be some difficulty in ensuring that these things happen? Will the Minister confirm that in the case of Sports Direct, since it is  fairly clear that there has been failure to comply with the arrangements, the doubled penalties to which we agreed in the then Enterprise Bill and the additional more difficult approach—not in numbers of employees, but in the amount per employee—will be applied in full in this case?

Baroness Neville-Rolfe: I am most grateful to the noble Lord for his courteous comments about his lateness—I am sorry to have dragged him away from such an important debate—and for his support for the regulations. The minimum wage came in under the Labour Government and we have had a lot of cross-party support for the system that they set up, including the Low Pay Commission. We agree on that. I am also grateful for his comment about common commencement dates, because we have a joint campaign to ensure that they are respected. It is not always possible, but when they are we should celebrate it. The points that he raised are technical and testing. I will start with the impact assessment. I think that the noble Lord was saying that he had not seen a copy.

Lord Stevenson of Balmacara: I am sorry to interrupt. On the front page of the impact assessment, which is attached to the explanatory memorandum—it is what I was given when I asked in the Printed Paper Office—there is usually a note in the top right-hand corner on what the RPC opinion is. That is obviously useful, because it is a traffic-light system as to whether it thinks that the assessment has been properly done. I fully expect it to have been properly done, but its opinion is not recorded there.

Baroness Neville-Rolfe: Perhaps the noble Lord remembers that the RPC had an issue with our impact assessment on the October 2015 uprating of the apprentice national minimum wage. It has, however, indicated that it is content with our new approach with respect to the assessment of the impacts of the 2016 upratings. Indeed, the assessment now looks at costs over two years, rather than one year, in response to RPC feedback. I hope that that clarifies the RPC position.
On the non-compliance estimates, we are working to improve them. I note what the noble Lord says about enforcement—he was saying, in a way, that we should look at higher-risk employers, and was talking about size and zero-hours contracts. I will take a look at the noble Lord’s comments and write to him about that whole area. I think that my spirit is the same as his.
With regard to Sports Direct, that is clearly a concerning matter. I have to be careful about commenting on specific employers, as noble Lords know. The double penalties have come in and, in relation to offences since the adoption of the regulation, they would of course apply. We are very much committed to ensuring that workers receive the money that they are owed and that unscrupulous employers face tough penalties. I like the combination of civil penalties, which have led to quite large amounts of income being recovered for people, and the occasional criminal penalty, where there is an egregious case and we can take totemic action. That is the way that we try to do things.
Motion agreed.

Pensions Act 2014 (Consequential Amendments) Order 2016
 - Motion to Approve

Moved by Lord Freud
That the draft Order laid before the House on 4 July be approved.

Lord Freud: My Lords, you will recall a previous set of consequential amendments connected to the introduction of the new state pension, together with a set of affirmative regulations that were discussed in February this year. This order makes a small number of further such consequential amendments. They do two things.
First, they ensure that existing administrative arrangements which are designed to facilitate the annual uprating exercise will continue to operate as they do now. Secondly, they give appeal rights to decisions about national insurance credits that count for new state pension purposes.
Article 2 amends provisions of the Social Security Administration Act 1992 which deal with alterations in the payable amount of certain income-related benefits: income support, income-based jobseeker’s allowance, income-related employment and support allowance, universal credit and pension credit. These provisions allow the income-related benefit award to be adjusted without the need for a further decision if the adjustment is due to uprating—whether it is the benefit itself that is being uprated, another benefit is being taken into account, or both. They also enable the decision-maker to take account of the new rates from the uprating date in determining new awards that begin before the uprating order has come into force. These are long-standing administrative easements which help to ensure the effective operation of the annual uprating exercise.
As your Lordships know, where a person is a member of a couple, their entitlement to benefits can be affected by their status as a couple. Therefore, where a working-age income-related benefit is in payment for a couple but the non-claiming partner is a pensioner, the benefit income could include state pensions. The amendments made by Article 2 simply ensure that business as usual will continue where a person’s benefit income includes new state pension. The forthcoming uprating exercise which will determine the rates to be applied from next April is, of course, the first to apply to the new state pension.
National insurance credits which count for new state pension purposes are provided for under Part 8 of the State Pension Regulations 2015. These are new regulations, made under a new power inserted in the legislation by the Pensions Act 2014. The policy is that decisions made in relation to these credits should, as is the case with decisions made in respect of existing credits awarded under the old credits regulations, have the right of appeal. As the law stands, they do not. The amendment being made by Article 3 gives that appeal right. This amendment should have been in  place from 6 April 2016 but, unfortunately, it was overlooked. Having identified the omission, we have acted as quickly as we could to put it right. This is why the order will come into force on the day after it is made.
My officials have been working closely with HMRC, which administers credits on DWP’s behalf, to devise a workaround. Once the order has come into force, HMRC will be revisiting the decisions made before it came into force. Where fresh decisions are made, they will carry an appeal right. There will be no substantial difference in outcome between an original decision, had it been appealable and successfully appealed, and a fresh decision that is successfully appealed. A successful appellant will have credits awarded to them. I should stress that to date there have been no appeals. That there have been no appeals is understandable. First, this issue relates only to decisions made in the period between 6 April 2016 and the date the order takes effect, which is around five months. Secondly, it only affects credits which a person has to apply for.
The practical impact of the gap in the law is restricted to decisions about credits which a person has been able to apply for since 6 April 2016. These include new credits to cover past periods in which a person was accompanying their Armed Forces spouse or civil partner on service overseas. Ordinarily, credits awarded for the tax year 2016-17 would be taken into account only in the assessment of new state pension awards made on or after 6 April 2017. However, the new credits for Armed Forces spouses and civil partners could affect awards made this year. A further mitigation is that before a disputed decision can be appealed, it goes through a process of mandatory reconsideration. So the decision-maker has to look at it again and if, on reflection, they consider that the decision should be changed then it can be revised, without the claimant having to go through an appeal process.
We also know that in relation to the new credit for an Armed Forces spouse or civil partner made under Part 8 of the State Pension Regulations 2015, out of 1,647 applications which have been decided up to 5 September 2016, 324 were refused—and of those refusals, 201 were because the tax year in question is already a qualifying year for other reasons.
Finally, based on data from last year—2015-16—about credits decisions made under the 1975 regulations, we know that only a tiny number of disputed credits decisions actually proceeded to appeal.
So with the change in the law imminent, and if they are needed, we anticipate that the contingency arrangements we have put in place will be required for only a very small number of cases. I can also confirm that, in my view, this statutory instrument is compatible with the European Convention on Human Rights. I hope this gives noble Lords reassurance that while it is accepted that justice may be delayed, it will not be denied. I beg to move.

Baroness Drake: My Lords, it is unfortunate that there has been an oversight in providing a right of appeal in respect of certain decisions on NI credits for the new state pension, but clearly it is recognised that this SI seeks to correct that.
However, I am a little confused because, as I understand it, the decisions potentially impacted by the oversight in relation to the appeal relate to credits for, in certain circumstances, people caring for children under 12, carers and spouses and civil partners of members of Her Majesty’s Armed Forces. It would be helpful if the Minister could clarify exactly which classes of credits were impacted by this appeal oversight, because it is difficult for the layperson to work it out. In particular, will he say whether that category or class of credits includes applications for credits from those caring for at least 20 hours a week, including grandparents?
The concern has to be over the extent to which the omission of a right of appeal may have affected individuals’ access to such credits and whether this SI addresses that sufficiently. Again, it was quite complex trying to follow what exactly was the answer to that question. Is it possible for the Minister to confirm or indicate the number of claimants who have been denied a right of appeal to date as a result of this omission—that is, the population denied that right rather than those who sought, in the absence of that right, to appeal?
The oversight concerning an appeal embraces all decisions on the relevant credits made between 6 April 2016 and the date when these regulations restore a right of appeal. The Explanatory Memorandum refers to minimising,
“the period when there is no right of appeal”,
for these certain classes of credits, but I am not sure how that impacts the individuals who may have sought to exercise a right of appeal during the period. Does this mean, for example, that all those who made applications for such credits which failed will automatically be written to and told that they now have a right of appeal? I am not quite sure how they will be addressed under this SI. It would be helpful to have that clarified.
As the Explanatory Memorandum observes, some credits are posted automatically while other credits must be applied for: for example, the credit for caring for at least 20 hours a week. The omission of an appeal sits alongside what appears to be government reluctance to report on the success of measures to improve the take-up of claimable benefits. The noble Baroness, Lady Altmann, as Pensions Minister, commented that it was regrettable that the number of carers claiming for NI credits was still so low—so I will take this opportunity to ask the Minister whether it is possible to be advised on how many carers claim such credits and the number the DWP estimates could be eligible for such credits, so that we have some idea of what the noble Baroness, Lady Altmann, was referring to when she referred to the regrettably low number of claimants.
My final point is on the uprating of the new state pension and the consequential adjustment to income-related benefits. Sections 150, 150A and 151A of the Social Security Administration Act refer to uprating by no less than earnings or prices. There is no reference to the triple lock in the new state pension. I cannot miss this opportunity, given that there has been much speculation and comment about the longevity of the triple lock, not least from the Government’s previous pensions Minister. Can the Minister confirm the exact extent of the Government’s commitment to retaining the triple lock?
Given the introduction of universal credit, over time the adjusting of income-related benefits to take account of the uprating of the new state pension will largely be in respect of awards of universal credit and pension credit. The experience of the poorest pensioners will continue to be influenced by the extent to which the uprating of the pension guarantee credit is comparable to, or less generous than, that applied to the new state pension. Can the Minister confirm the Government’s policy for the uprating of pension credit, not least over the course of this Parliament?

Lord Kirkwood of Kirkhope: My Lords, I will make a short contribution to this debate. I think the House is grateful to the Minister for coming forward with these two corrections to omissions. It is reassuring to hear, if I understand the Minister accurately, that these things have been caught in time, so that there has been no real loss to individuals. Like the noble Baroness, Lady Drake, I would like more reassurance, because it was quite a complicated explanation. I think the Minister said that no results in terms of loss of appeals to national insurance credit were discernible.
It would be valuable if the Minister could take careful note that some of us might like to come back to monitoring this in the uprating debate next spring, so that we will have a better chance to look at all the downstream consequences of the changes. In addition, I would like to hear a little more reassurance about paragraph 12 of the Explanatory Memorandum, Monitoring and Review, which says:
“We will not monitor these changes specifically, but will do so through established customer feedback processes”.
I wonder what that means and how meaningful it is when these changes might be affecting tiny numbers, but the tiny numbers might be significantly affected. I am a bit nervous about leaving this to customer feedback. Will the Minister take that point on board?
On another process point, I have always been amazed at the extent of the expertise available to the professionals in the department, the Pensions Directorate and the Pensions Agency, its predecessor. They were expert at coping with this immense detail. The regulations contain two omissions, and that is two omissions too many. They may be relatively minor in their extent, but, as I keep saying to the Minister, the ministerial team has to make sure that there is enough resource in the department to ensure that parliamentary draftsmen get all the details they need, so that omissions are not made in future. The department continues to suffer staff cuts in a way that puts unreasonable pressure on the experts who are good enough to provide us with the regulations that we consider here in Parliament. Will the Minister reflect on that?
It may be that these are two completely one-off exceptions. I hope that it is not the beginning of a trend, and those of us in Parliament who look at these things will be watching very carefully. I do not blame the professionals in the department: if they are underhanded in terms of dealing with the immense volume of ineffably complicated minutiae of legislative proceedings and provisions, they need all the help that they can get.
Again, I welcome the fact that this seems to have been picked up in time, but if the Minister could give  us some more reassurance about winners and losers, even if it takes him over the coming months until the next uprating in the spring, I am perfectly content to support these regulations. I support the points raised by the noble Baroness, Lady Drake, but I am perfectly happy to support these regulations and allow them to go forward.

Lord McKenzie of Luton: My Lords, I shall follow the usual incisive contribution of my noble friend Lady Drake and the contribution of the noble Lord, Lord Kirkwood of Kirkhope, in thanking the Minister for his introduction of this order. It is quite like old times. I also take the opportunity to thank the officials who spent a bit of time yesterday with us trying to unlock for us some of the intricacies of these provisions which, although small in terms of drafting, are quite complicated.
We note the Minister has confirmed at least in one respect the judgment of his predecessor, concerning compatibility with the European Convention on Human Rights. I state from the outset that we do not seek to challenge these provisions, although we add our concerns to that expressed by the Secondary Legislation Scrutiny Committee, that overlooking an appeals mechanism within three months of a new pension scheme starting does not inspire confidence. My noble friend Lady Drake has rightly chided the Government in stronger terms, and the noble Lord, Lord Kirkwood, made the point that two omissions are two too many.
As we have heard, the order seeks to address two distinct issues. First, it extends the automatic adjustment of certain benefits where a recipient or their family are in receipt of another benefit which is uprated. In particular, it ensures that the definition of benefit income includes the state pension under the Pensions Act 2014—that is, the new state pension—and that definitions of alteration include those transitional provisions of the new state pension which have to be uprated by no less than the increase in prices. That includes protected payments, certain increments inherited from a deceased spouse or civil partner, and certain other deferred amounts inherited under the state pension. Secondly, as the noble Lord explained, there are appeal rights to secure certain national insurance credits.
On the first issue, the automatic adjustment would apply only to income-related benefits including income support, JSA, ESA, pension credit and universal credit. The Explanatory Note to the order sets out the limited circumstances where the state pension will form part of the benefit income of a person claiming a working-age benefit. Its application is asserted to be—perhaps the Minister will confirm this—for pension credit awards and potentially for so-called “mixed” couples, where there is currently a choice of pension credit or the working-age benefit. We are told that this choice is to be phased out. Perhaps the Minister will also confirm the timing and mechanism for this to happen.
To the extent that income support, JSA and ESA are to be replaced by universal credit, the Government anticipate that these arrangements in due course will apply to universal credit and pension credit only. This raises a number of questions. First, there is the timetable for universal credit. It is understood that the most  recent plans—pre the resignation of IDS—were for universal credit to be rolled out for all new claimants between 2016 and June 2018, with gateway areas becoming full service areas. This was to be followed by migration of current claims of legacy benefits to be completed in 2021. Is this still the plan?
How does the Minister respond to the article in Tuesday’s Times, which refers to the involvement of GCHQ in alerting No. 10 to security flaws in the programme, with significant numbers of claimants facing significant issues? Can the Minister assure us that, now IDS is out of the way, the reported chaos under every stone has been dealt with? Quite apart from this order, however, we should find time to debate this fully.
So far as pension uprating is concerned, Sections 150, 150A and 151A make reference variously to uprating by not less than earnings or prices. My noble friend Lady Drake pressed this issue. There is of course no specific reference to the triple lock in these statutory provisions, although it can be catered for within the drafting formulation. I press the Minister, as has my noble friend, to confirm the Government’s position on this matter, particularly in light of his predecessor’s recent comments. Will the triple lock continue to be applied, as now, at least until the end of this Parliament?
We have been told that Article 3 amends an omission of a consequential amendment arising from the 2014 Pensions Act, and this omission being included in the right of appeal for decisions concerning awards for credits made under Part 8 of the State Pension Regulations 2015. We are told that any credit decisions under these provisions in respect of the tax year 2016-17 will need to be reconsidered once the law has changed. My noble friend, again, pressed on that matter. As my noble friend said, these could relate to decisions on credits for spouses and civil partners of members of HM Forces, people caring for a child under 12, foster carers, people approaching pensionable age. These are important provisions.
The Explanatory Note suggests that this omission will have very little effect because it concerns only one class of credits—post-April 2016 class 3 credits to cover gaps in the records of those accompanying HM Forces, as spouses or civil partners, in a posting outside the UK. This seems to be on the basis that generally decisions on tax credits for 2016-17 will be relevant only in determining the new state pension for those reaching state pension age for 2017-18, by which time the problem will have been fixed. The exception appears to be spouses and civil partners of HM Forces personnel, where credit from 1975-76 can be relevant to pension awards for 2016-17. Can the Minister confirm that that is correct and that is why it is of limited effect?
Can the Minister say generally whether the appeals rights apply only to those credits which have to be claimed and not those applied automatically? I think he did that in his presentation, but I ask: if that is the case, what is the remedy, should the latter be subject to error? Is this a matter of administrative adjustment?
The Explanatory Note seems to be suggesting that, notwithstanding that there is no current right of appeal in certain circumstances, HMRC can in the interim undertake a reconsideration, which would be the first  stage of an appeal should the right to one exist. Again, I think that that is what the Minister said, but perhaps he would confirm that.
The issue of National Insurance credits takes us back to an earlier debate about generally improving take-up of these credits, which are not awarded automatically—again a point pressed by my noble friend Lady Drake. In resisting a reporting process to Parliament on a take-up strategy, the noble Lord said that,
“we intend to review these systems to identify what efficiencies can be put in place to make the system of national insurance credits as simple as possible”.—[Official Report,18/12/13; col. 353.]
Would the noble Lord please now offer us an update?

Lord Freud: My Lords, I thank noble Lords for their contributions, which made it rather a more interesting debate than I had anticipated. I will go straight into the questions that were raised rather than reprising the content.
There have been two omissions. One was something that has actually potentially affected people; we are getting that first one back in time. We take this seriously. It is not the first time that I have had to grovel somewhat about redoing regulations; I suspect that some noble Lords on the other Benches have had similar experiences.

Never.

Lord Freud: Never! So, clearly we need to take this seriously. In this case, however, the impacts have not been great. On how the feedback works, we have an established complaints and resolution procedure—and it is particularly valuable doing it this way because, as the noble Lord, said, the numbers are small—whereby people can either write or phone in. We will catch these and assess what is happening.
I say to the noble Baroness, Lady Drake, that I described in my speech a process that, so far, no one has tried to appeal. If they do, there is a workaround, so in practice there will be no gap at all for people. The minimum guarantee for the pension credit standard will continue to be uprated, at least by earnings every year. I am in a position, I think, to confirm to noble Lords that the triple lock is in place through this Parliament, as has been said several times in the past.
On the question raised by the noble Baroness, Lady Drake, about credit decisions, the oversight affects all decisions on credits—which includes grandparents—made under the powers in the Pensions Act 2014 from 6 April 2016 to when the law is changed. The specific decisions affected relate to credits for spouses and civil partners of members of Her Majesty’s Forces, child benefit recipients, people caring for a child under 12, foster carers and people approaching pensionable age—and, as I mentioned, it includes grandparents. I am afraid that we do not have data on the numbers. There are around 400,000 eligible for carer’s credit and, in August, there were 10,900 recipients. There are 200,000 service spouses eligible and, since April, we have had 1,850 applicants.
The noble Lord, Lord McKenzie, enjoys reading newspaper articles on universal credit. I can confirm that there was a most imaginative use of the present tense in the Times—all references to spies are pretty  historical by now. We have been working with GCHQ all the way through to make sure that universal credit is secure. It has monitored and is content with the system; that is something that has been of immense value to us as we have developed the system.
We made an announcement in July on the timetable. We now envisage universal credit being completed by March 2022 instead of March 2021, but nine months of that difference is contingency.
The noble Lord, Lord McKenzie asked about credit applications. Decisions on credit applications made in respect of 2016-17 will be relevant in determining the new state pension entitlement only of people reaching state pension age from 2017-18, as this will be the first cohort for which 2016-17 will be a relevant tax year. What he was asking was therefore correct.
On his question about a review, we carried out a review and found that the main issue was lack of information. This is being addressed in the new state pension awareness campaign. I think I have covered most of the questions, but I will go over them carefully afterwards and I will write to noble Lords.

Lord McKenzie of Luton: Before the noble Lord sits down, I imagine he has a note from the Box ready, so perhaps I could ask him to comment on the right of appeal in respect of credits where they are awarded automatically. From what he said, I think the right of appeal applies to credits that have to be claimed. If there is an error in the application of automatic credits, what is the remedy and how is it applied?

Lord Freud: I will confirm this in writing, but my impression is that there is a right of appeal in these circumstances. It may be that there was no gap in the legislation. I will confirm that, but that is my starting position for 10.

Baroness Drake: Before the noble Lord sits down, I just want to take advantage, if I may, to ask about the issue of pension credit. It has been confirmed that it will follow the earnings link, which we know is in the legislation. But in recent times we have seen increases in pension credit greater than what is required by legislation in order to ensure that the poorest pensioners do not receive a smaller increase than those receiving state pension. Given the kind of statements made in the Budget in 2015, is the disposition of the Government still to say that there will be a focus on the poorest pensioners through pension credit and that they will not feel constrained to stay only within what the legislation says but may go above it in order to protect those poorest pensioners? I am interested so I am pushing the Minister on this point.

Lord Freud: I always love to answer the noble Baroness in a positive way, but I am not in a position to speculate on the precise levels in any particular year. We do not have long to wait until we see some of the figures. I am feeling incredibly confident about my last answer, almost to the extent that a letter is not required on this particular point. With that response, I beg to move.
Motion agreed.
House adjourned at 5.33 pm.